I found the "Pay off our mortgage" part a bit strange. Living in Poland I don't know anyone who managed to get a mortgage without mandatory life insurance which makes the bank the first beneficiary. You die, they get the money, mortgage is paid off, family keeps the house. Pople like to bitch that it's a scam, hidden cost, extra money for the bank etc, but it's designed for situations like this (it protects the bank as well as the customer).

From the limited sample size I've gathered with sadness thus far: For serious cancer, terminal or not, the system seems designed for the cost to be "everything you have" whatever that happens to be.

Be in a welfare state is somewhat a good thing even if you pay more taxes.

Although I'm open to a demonstration as to how I'm wrong about that. Last time I checked, health insurance typically can't even cross state borders due to hyper regulation. I don't think you can get further away from Capitalism than the US health system.

For some people this may be true. My mother died of breast cancer at 59 and it really didn't cost her anything thanks to the fact she had health insurance through my father's work. My parents were probably lower-middle-class but the fact that my dad worked the same job for 39 years and had steady health insurance throughout kept them from this fate.

Usually an employer will give you an additional survivor's benefit, usually between 10K to up to a year's worth of salary.

(For example)

The numbers are particular for a young woman in Illinois, but it won't be egregiously higher for young men.

(because other policies sort of mix in an investment product)

We also both have additional personal life cover for at least 6x annual salary.

This doesn't seem excessive cover to me - maybe because we are in our 40s with kids (and knowing people who have died and having close relatives who are terminally ill) makes you worry about these things more - I certainly didn't in my 20s.

Any case similar to OP will become problematic. When you get terminally ill you will eventually lose your job. Thanks to COBRA you can keep health insurance, but not the life, disability and long-term care insurance plans. And getting new term life policy at this stage is not really an option.

But when I bought a house, I was advised to get insurance cover specifically for the amount of debt remaining on the house; the policy lasts the length of the mortgage and pays out whatever is debt is outstanding.

And, yes, they likely make money on that money while it's not being paid out.

Here is an actuarial table that lays out the likelihood of dying and how long you're expected to live at every age.

http://www.ssa.gov/OACT/STATS/table4c6.html

So, say they collect $7200 from each healthy 30 year old male (when they signed up) over the 20 year term. They just need 70 people to sign up in order to pay out one $500K benefit. Many fewer than 1 in 70 people who sign up will die during the term.