How to protect your family AND your business with insurance
When it comes to asset protection, we are focusing on two distinct assets in peoples’ lives. Family and Business. You need to protect both. We have some additional information below on how to best protect both in case of a crisis situation.
♦ Life protection: This is the most basic protection and is designed to pay a lump sum when a person is diagnosed as terminally ill or passes away. People should consider how much their dependents would need to cover any financial commitments, such as business and personal-loan repayments, income replacement and other lump-sum costs. Often, this is automatically included in Super, but if you haven’t paid attention to it, you may be surprised to find you are inadequately insured.
♦ Income protection: Income protection will pay up to 75 per cent of a person’s salary to help them with their everyday expenses, should they not be able to work due to an illness or an injury.
♦ Trauma cover: In this type of cover an agreed lump sum is paid out should a trauma event such as a heart attack or cancer be diagnosed. It provides financial assistance to meet medical and rehabilitation costs, as well as debt repayments and family expenses.
♦ Total and permanent disablement: When a person is told they are unlikely to ever work again, retirement can start then and there. This cover pays a lump sum that can discharge debts, pay for medical costs and provide an income stream for life for both the disabled person and their carer partner.
PROTECTING THE BUSINESS
For the business, the above health triggers can be packaged into policies that protect the continuation of the business by paying out lump sums to keep the bank happy, providing lump sums or ongoing income to the business to cover absences of key personnel, or providing the funds to transfer ownership of the business from one person to another.
To make this assessment as effective to your own personal position as possible, write down the following key pieces of information about you and your family:
♦ The recorded income in the last two annual financial statements
♦ The replacement income (after tax) needed to meet day-to-day expenses, including servicing debt
♦ How much debt would need to be repaid if you became permanently disabled as opposed to temporarily disabled
♦ Other expenses, such as education expenses and medical costs, that you would need to cover
♦ The amount of savings that you have available for emergencies and how long these savings would cover the day-to-day expenses for.
If you are a business owner, you should consider the following for business continuation:
♦ The approximate worth of the business
♦ Who the owners of the business are and what their health and insurance situation is
♦ If one of the owners were unable to work for a period of time, how much would the business need to pay business debts and maintain operations
♦ It is a prudent idea to seek advice from a qualified financial planner on these issues to ensure you have the right level and type of insurance cover for you and your business.
With so many types of cover it’s easy to be confused, that’s why you should speak to an expert. There is also some tax implications (including deductions at times) of having insurance and how it’s structured. Have you looked at your insurance in the last 2 years? If not, it’s likely you’re inadequately insured or possible wasting money. Contact us today for a full review.