How does stand-alone serious illness cover differ from accelerated serious illness cover?

Stand-alone serious illness cover and accelerated serious illness cover are two distinct types of insurance products that serve different purposes. The key difference lies in the effect on life cover after a claim is made.

When a claim is paid out under accelerated serious illness cover, the life insurance component of the policy is typically reduced or cancelled, as the benefit from this kind of cover is paid directly from the life policy itself. This means that if the policyholder survives a serious illness, they have potentially diminished life insurance coverage, reflecting that a portion of their coverage has already been utilized.

On the other hand, stand-alone serious illness cover is a separate policy that does not interact with life insurance in this manner. When a claim is made and paid out on a stand-alone basis, it does not affect any life cover that the insured has in place. Therefore, the life coverage remains intact, and the policyholder continues to have the same level of death benefit available.

This distinction is crucial for policyholders as it impacts their financial planning and protection strategy. Understanding how these types of cover interact with life insurance is essential for making informed decisions about personal insurance needs.