Life insurance policies are designed to only pay out on your death, however most life insurance policies will pay out early if you are diagnosed with a terminal illness where you have been given less than 12 months to live.
If you are looking for a policy that pays out if you get seriously ill you should consider Critical Illness Cover. This insurance will pay out on diagnosis of a wide variety of illnesses, including if you have a stroke, heart attack or get cancer of certain severity.
A payout from Critical Illness Cover can ensure you have money to help at a time you may not be able to work. Just like life insurance, there is no restrictions on what you can spend a Critical Illness Cover pay out on.