Australia’s more than two million small businesses make an enormous contribution to our communities and are the backbone of our economy.
Here are four steps that every small business owner should consider when thinking about their insurance.
1. Protect your most important assets
Your most important assets are your family, your employees and your ability to earn an income. Small business owners have a lot on their plate, juggling many roles within a company. With so much going on, it is understandable insurance won’t always be high on a long list of priorities.
However, ABS statistics show 5.3% of Australians experience at least one work-related injury or illness within a year. This is in addition to accidents taking place outside the workplace and non-work related illnesses. Any of these events could mean time out of the workforce and sudden loss of income, so it’s worth thinking about how your business would manage in this type of situation.
Additionally, offering life insurance to employees can act as a compelling tool for attracting and retaining top talent, and could be a highly competitive benefit!
2. Understanding different types of cover
It’s important to understand the different types of cover available for both you and your employees. For instance, income protection, trauma and TPD can protect your income by providing a regular lump sum if you become sick or injured.
Life insurance provides a lump sum benefit for your dependants should you pass away or become terminally ill. Key person insurance (also called key man insurance) covers against lost revenue and assets if you or a key person were to pass away, or became unable to work due to disability or illness.
Imagine if a business is owned by two business partners. One of those partners becomes sick and dies. What happens to the business? His/ her spouse will have a right to take over the share of the business. With Key person insurance, the surviving business partner can buy out the remaining share of the business and continue operations, allowing the business to still continue forward.
3. What’s important to you?
When considering your options think about what matters to you most and use that as a starting point. In our research business owners emphasised the importance of safeguarding their lifestyle, family and business.
4. Ask around
Seeking professional advice is always a good idea when reviewing your insurance. Our research shows small business owners consult a variety of sources for financial information. These include independent financial advisers, accountants or lawyers, brokers, internet forums, banks, friends and family. The research also showed that SMEs found using a broker saved time and gave them peace of mind.