What happens when you aren’t able to work?

No one knows more than you how much time you have devoted to building your business - but what happens if you, or a partner, are not around to run it?  Illness and accidental injuries are unpredictable events, and no matter what careful steps you take to minimise the chance of them occurring – you cannot eliminate them.  When the business owner or manager is suddenly unable to either earn an income or participate in running the business, the impact is even more immediate and wide-ranging.

Income protection

Many people are familiar with income protection insurance which provides you with an income if you are unable to work because of a serious accident or Illness. The benefits paid are generally monthly for the duration of the incapacity, or of the policy, whichever is the shorter period.  If you do not know how you would pay your family’s bills or your own regular income, you should consider purchasing income protection insurance. 

Most policies permit you to cover up to 75% of your gross income.  Income Protection Insurance should commence after your employer is no longer obliged to continue paying you if you are no longer able to work.
It is essential that if you are self-employed, you may require that the benefit continue until retirement or when your income would normally have ceased.  Remember that the premium costs associated with this insurance are tax deductible.

Business succession planning

Business Succession Planning structures a formal agreement on how the business equity is distributed when a partner or shareholder exits the business through death or disablement.
Every business should consider how the ownership of the business will be transferred in the event of the unforseen exit of a partner or shareholder. These arrangements guarantee that the departing partner or shareholder or their dependants receive a fair price for their equity while the survivors maintain control of the business.

The surviving partner may in fact want to carry on the business but may not have the funds to pay out the other partner or his dependents to buy their share of the business. This is where business succession insurance provides access to these funds if necessary.

This means that the business you and your partner worked so hard to build can continue on, instead of perhaps being saddled with additional debt by having to pay out the dependents of the other shareholder.

Trauma insurance

Trauma or critical care insurance is a type of policy that pays a lump sum if you are diagnosed as suffering from one of many defined medical conditions. The illnesses covered vary from policy to policy, but generally most cover cardiovascular disease, cancers, stroke, heart attack and coronary disease. Some policies also cover Death and Permanent Disability.
With the increasing incidences of cancer and associated illness and diseases trauma insurance is now the most claimed policy for a lump sum type of benefit.

As your insurance broker, we can help to mitigate your risks and minimise what can be a significant financial impact on your business should the unexpected happen.  If you would like to know more or discuss this further, please contact one of our experts and we look forward to assisting you.

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