How much life insurance cover do I need?

This question has always intrigued me because it sounds similar to the equally difficult to answer question, ‘how long is a piece of string?’

I suppose the answer is, ‘as long as it needs to be and as much as you need to have’.

But that's probably not going to move the answer along much, so here is a good place to start your thinking.

Business Owners and Professional Partners have unique risks and needs not usually adequately covered by their private family insurance plans.

Business is filled with uncertainty. Now you can plan for that.

While the risks to businesses are seemingly unending, the personal risks to Owners and Professional Partners can usually be found in 4 areas.

• Business Key Person and Debt protection
• Business Fixed Expenses protection
• Business Owners and Professional Partnerships protection
• Business Owner and Partnership succession protection.

These become increasingly sensitive and complicated issues for business owners and business partners who may have specific personal medical issues that deserve an enhanced level of privacy and are kept totally separate from their commercial activities.

• Company directors may need to use life insurance to protect the company trading debts, the director's account (when Director's funds have been lent to the company) or to protect the capital investment.
• Business partners may need to use insurances to limit becoming personally liable for company losses as their personal homes are often cross-securing the company debts.
• Partnerships and Investors may require company key-persons to use a range of insurances to help protect capital invested.

Why is this really important?

Personal insurance applications are one of the very few areas in business life where an individual's personal health and lifestyle is mandatorily required to be disclosed.

• Your private health and lifestyle history is considered an integral part of the insurance application and assessment process. This is because personal insurances are contracts between the life insured/policy owner and the life insurance company, so there's a legal duty to take reasonable steps not to mislead under Section 20B of the Insurance Contracts Act, requiring the full and frank disclosure of all personal sensitive medical and personal health data.
• Should an application for insurance be formerly declined, this can have unintended and long-lasting effects on so many areas that it becomes a risk to all future insurance.

This is why you need a specialty financial adviser from unusualrisks.com.au to help an individual and their company through the process.

How it all comes together.

Business Key Person and Debt protection

The death or disablement of a key person could have a significant impact on the revenue of a business and therefore its ability to meet its day-to-day expenses.

• This could be because the key person for example, has a unique skill or has particular knowledge relevant to the business or has relationships with key clients nationally or internationally.

Business Fixed Expenses protection

Business Overheads cover, (also known as fixed business expenses cover), allows a business to continue to pay its fixed expenses if one of the business owners becomes sick or injured.

• This type of cover usually pays a monthly benefit to the business, to meet its day-to-day fixed costs, generally for up to 12 months, if the insured person is disabled and is unable to work in the business at their full capacity.
• All family businesses need an insurance firewall to reduce business liabilities becoming personal liabilities.

Insurance policies to cover business overheads are generally owned by the business entity, sole traders or partners (in the case of a partnership and the policy premiums are generally tax-deductible, and the proceeds treated as assessable income to the business.

Building protection into your business planning is one of the most important decisions you can make.

Business Owner and Professional Partnerships protection

At some point, many businesses will borrow money from a financial institution or a director – this may be to provide a business with capital for a major purchase or improvement, or simply to provide a source of working capital.

The purpose of business debt reduction insurance is to protect the business against its debts and to protect the guarantor and their estate against any claim over their personal assets.

• If the Key-person or Guarantor to a business loan experienced a serious illness, accident or worst - an unexpected death - a business could experience significant financial difficulty and may find it hard to continue to meet all of its loan repayments.
• A loan default could result and then trigger a 'call-up' of the business loan facility (usually 7 days notice) with a demand for the loan to be repaid in full.

Most 'at call loans' deem a Key Person death or disability as an automatic trigger event to call up the loan.

Business Owner & Partner Succession protection

If you own a business with other people, it’s important for everyone to agree on how the ownership of the business will be transferred, should one of the owners (or principals) pass away, become disabled, or leave the business for another reason; eg: resignation or retirement.

• This is referred to as business continuation or succession, planning.

How that is made possible is usually heavily dependent upon;

• successfully applying and establishing personal insurances for protecting business risks, and
• involves the full and frank disclosures of all personal sensitive health and lifestyle information.

These create multiple specialty risks.

Unusual risks are the experts to manage and protect the information security and advice structures required by these business owners and professional partnerships.

#LoveTakesAction

Professional people with chronic health conditions need their own life insurance adviser

Many people in professional business use life insurance products but ...

I’m in business with other people and we need to protect ourselves from the usual business debts. Can you work with my business colleagues and keep my private health details private as well?