5. Accident, Sickness & Unemployment
Very often taken out at the start of a new mortgage. In the event either of the three events happen a monthly income (tax free at present) is provided after a deferred period but only pays out for 12 months or 2 years. The policy can also be set up to cover all three at once or Unemployment only or Accident & Sickness only. If a claim is made that pays out for the 12 month or 2 year period (depending on which option is selected) the policy will cease. There are certain limitations on the amount of income a policy may be set up for. A typical example is the monthly mortgage payment plus insurance related costs plus 25%.