Policy for the self employed

ABBEY NATIONAL is launching an insurance policy, aimed mainly at the self-employed, that will provide benefit for up to 12 months to people who are unable to work through illness or disability.

The policy is being sold by direct mail and will not be available through branches.

It is underwritten by General Accident and costs between pounds 1.58 and pounds 4.50 for each pounds 50 of monthly income insured, depending on the age and occupation of the individual.

Manual and agricultural workers are among those in the highest cost bracket. Policyholders can insure up to 75 per cent of their total monthly income to a maximum of pounds 1,000.

A 40-year-old self-employed management consultant would pay pounds 29.75 a month to cover pounds 700.

The monthly benefit is payable after the first 30 days of an accident or illness that prevents policyholders from following their normal occupations.

Abbey's policy is designed as a cheap form of income replacement insurance, but should not be confused with full permanent health insurance that pays benefits indefinitely until a retirement date stipulated by the policyholder when they sign up.

The premium on the Abbey's accident policy compares with one of pounds 43.81 for a self-employed 40-year-old management consultant to insure himself under the Norwich Union Safeguard permanent health insurance policy.

The benefit is index-linked and would be paid after one month's illness until the man retired at 65.