What is a Terminal Illness?

Terminal illness is defined as an illness or physical condition that is certified by a physician to be reasonably expected to result in death within a certain time frame.
A terminal illness rider is now very common in life insurance policies. Basically, if a physician says that a person only has, for instance, 6 months left to live, and he or she were covered by a life insurance policy with terminal illness protection, this person would be able to accelerate his death benefit and receive money prior to his passing away. By accelerating the death benefit, this would mean that the insured would receive less than the face amount of the policy.

Example: A person is diagnosed with terminal cancer and has only 12 months left to live. He has a life insurance policy worth $100,000. He would be able to file a claim and accelerate his death benefit. The company approved his claim and offered him an accelerated death benefit of $75,000