Is your business safe?

Your business is everything to you; it’s your passion and your livelihood.

But have you ever stopped to think what would happen if illness or injury meant you couldn’t work for a month, or even longer?

Statistically there’s a high chance you’ll get to find out, because before age 65 there is a three in five chance that you’ll be unable to work for a month (due to illness or injury), and a one in three chance that you’ll be disabled for 3 months or more.

The consequences of being unable to work and generate an income are probably fairly obvious: your ability to meet the day to day cost of supporting your lifestyle (and your family’s) will be severely diminished, especially if you have no savings to fall back on. Many people will start to struggle to meet their commitments after a couple of months, and at that point you may need to consider selling assets, moving, cutting back, or getting help from family or friends. It’s not something that bears thinking about.

Your business expenses don’t stop even if you do

On top of all this – and often overlooked – is the fact that many costs associated with running your business are fixed. For example, the rent on your premises, your vehicle lease, salaries of your staff, electricity, telephone, cleaning, business insurance; the list goes on and on. How would you pay those costs? And what would happen to your business if you couldn’t?

You may think you are protected but you probably aren’t

You may think that workers compensation, or your business interruption insurance, or even your income protection policy – if you have put one in place – covers these expenses, but they won’t.

A simple way to protect yourself, your business and your employees

Business expenses insurance is a type of cover designed to pay these fixed business expenses in the event that you are unable to work due to illness or injury. Think of it as income protection for your business, sitting alongside your own income protection cover, and leaving you in the best possible position to deal with the financial ramifications of you being unable to work.

Fixed business expense Covered under business interruption insurance? Covered through personal income protection? Covered through business expenses cover?
Rent, rates, taxes and insurance on your premises
Utilities (power, internet, landline, mobile)
Vehicle leasing, registration, insurance
Leasing – equipment, tools, loan repayments
Salaries of non income generating employees, including Super Guarantee and payroll tax
Contracted costs (eg. cleaning, security, advertising)
Other costs eg bank fees, interest on loans, business insurances

Business expense protection – an ideal partner for your own income protection

Your personal income protection is designed to cover up to 75% of your own taxable income from your business. But if you have fixed business expenses and you don’t also cover these, you’ve only got half the protection you need.  Business expenses protection is the ideal partner to your personal cover, and will help ensure you still have a business to come back to.

Your next step is easy

Your specialist risk adviser can explain the benefits of Business expense protection in more detail, and determine whether it is appropriate to your circumstances. They can also put an overall protection plan in place tailored to your unique needs and budget. Keyperson       offers business expenses protection from a number of Australia’s leading life insurers.

For more information, or to arrange an obligation free appointment, email Veronia at admin@keyperson.com.au or phone on 1300 785 577.

Small business underinsurance a ‘ticking time bomb’

Most Australians have inadequate life insurance, with research suggesting that as a nation we have a life insurance shortfall of around $100 billion.

But whilst the issue has been widely discussed and documented, there has been little discussion around the issue specifically in relation to small business owners.

The potential consequences of small businesses being uninsured or underinsured, can be much further reaching than those for underinsured individuals. That’s because most small business owners don’t just have family members dependent on them, they have employees and suppliers, and so the economic flow-on of a small business owner dying or being disabled can be much more devastating.

In this regard, the recent findings of a survey conducted by the Cameron Research Group are alarming, and suggest that the small business underinsurance issue could be a ticking time bomb. Their survey, ‘The Australian Small Business Market for Financial Services: 2010’ contained some disturbing statistics about small business owners and life insurance:

  • Whilst 100% of Small Business Owners (SBOs) have heard of Life Insurance, only 65% of them have cover
  • 3 in 5 SBOs have no TPD cover
  • 9 in 10 SBOs with loans have no loan protection in place
  • 3 in 4 SBOs have Trauma cover
  • 3 in 5 of SBOs have no Income Protection Cover

These figures paint a picture of small businesses placing their families, business partners and employees at risk, especially when one considers that even something minor like a broken leg or glandular fever could leave a business owner unable to work and generate an income for weeks or even months. With no protection in place, the pressure of ongoing business expenses without an income to cover them may prove too much, and it is not uncommon for small businesses to close for this reason.

Whilst help is at hand – in the form of a wide range of life insurance solutions suitable for small business owners – it can be a complex area, especially as there are issues such as tax, ownership, and partner ‘buy-outs’ to be considered. To the extent that the wrong cover can be as bad as no cover, small business owners should seek the advice of a financial adviser specialising in this area.

At Keyperson Life Insurance we have already tailored life insurance solutions for many small business owners. For more information contact us today on 1300 785 577

Why are doctors at risk?

Many Doctors are failing to protect their biggest asset; themselves

 With years of education behind them and years of earning potential in front of them, doctors are a valuable commodity. But why are so few protecting themselves with insurance?

You’ve worked to give yourself a good income. And your income is going to play a big role in your lifestyle, and that of your family, for a long time to come.It sounds like something you’d want to protect, right? But underinsurance is an issue facing an alarming number of Australians, from all walks of life – including doctors.

 

The insurance we’re talking about is life insurance – the most common forms of which are death cover, total and permanent disability (TPD), trauma insurance and income protection.

When you’re working in a career where you’re exposed to career-threatening hazards like contracting a blood borne disease, Life Insurance is a recognition of the unique risks you face every day.

 

Insurance for business owners

Many doctors are self-employed, adding another layer of financial responsibility to the equation.But despite their significant insurance needs, many small business owners are also failing to protect themselves and their families with adequate insurance.

According to a 2006 survey by the Investment and Financial Services Council (FSC), less than half of small business owners feel they have adequate cover[1].

 

It could even reduce your tax bill !

Income protection insurance is one of the most relevant types of cover for professionals – including the self-employed. It can replace up to 75% of your income if you can’t work because of sickness or injury.

 

How much does it actually cost?

Let’s take the example of a 39-year old male doctor who earns $120,000 pa. He takes out:

  • an income protection policy to cover 75% of his income (or $7,500 per month), and
  • a business expenses policy to cover $10,000 per month of fixed business expenses.

His total premium before tax is $2,810. But because his income protection premiums are tax-deductible, his after-tax premium reduces to $1,644. At about $30 per week, that’s the equivalent of a take-away pizza each week.

Source: Asteron Life Limited, based on a non-smoker taking out an Agreed Value Income Advantage policy, and an Indemnity Contract Business Expenses policy, both with 30-day waiting periods and stepped premiums paid annually.

 

Get the cover you need

The best way to find out the types and amount of cover you need is to speak to a financial adviser. They can help you get the right cover, and make sure it’s structured in a way that makes it as cost-effective as possible.

This material is current as at 12 June 2012 and is not intended to constitute personal advice, and must not be relied on as such. This information has been prepared without taking into account your objectives, financial circumstances or needs. Before making a decision based on this material, you should consider the appropriateness of this material having regard to your own objectives financial circumstances and needs. You should consider obtaining independent advice before making any decision.


[1] ‘Investigating Income Protection insurance in Australia’ – FSC, July 2006.