If he wanted to keep his outgoings to a minimum and just cover the mortgage liability of £500 per mo...
If he wanted to keep his outgoings to a minimum and just cover the mortgage liability of £500 per month, Mark could do this via a sickness, accident and disability contract. For example, Scottish Provident would allow him to cover himself for £500 per month until the age of 60 at a cost of £13.26 a month (assuming smoker rates).
As a self-employed person with no other income, we would recommend IP either on its own or in combination with an accident/sickness contract that has a shorter term. He could also take his savings into account when looking at covering his outgoings for a few months. We do not know his outgoings but it is likely he should be able to survive for six months on £12,000. If he was entitled to State benefits, the maximum Incapacity Benefit would be £64.35 a week after 28 weeks, however this would only be payable if he were assessed as being unable to work at all, not just unable to undertake his own occupation.
Assuming he insured himself for maximum benefits after 26 weeks on a level basis he could insure himself for £15,744 a year (65% less State benefits) with Swiss Life at a cost of £27.57 a month. This is on a reviewable premium basis.
We would normally recommend a guaranteed premium basis however, and would also need to consider the flexibility of the product and whether indexation was required. On a guaranteed premium basis, a product such as Friends Provident's would offer a much higher level of benefit at £19,046 a year at a premium of £44.61 a month.
