Is your business protected?

Whether your business is structured through a partnership, company or trust, few have effective mechanisms in place for the transfer of equity and/or control if one of the owners is lost to the business due to death, total and permanent disablement, or critical illness.

In many cases the loss of a business owner from one of these events results in the demise of an otherwise viable business simply because there was no succession plan and funding agreement in place.

A business succession plan, incorporating insurance funding protects your investment and ensures the survival of your business should one of the business owners or key person die, become totally and permanently disabled or suffer a critical illness.

Who is a Key Person?

Most businesses have one or more key persons whose skill, knowledge, experience and leadership ensures the success of the business.  A key person in any business may generally be defined as one whose death, disablement or early retirement may have an adverse economic effect on the business.

It is important to identify these key people and to analyse and quantify the adverse affect that is likely to be suffered by the business in the event of death, disablement or illness.

There are three basic protection needs that typically apply to businesses:

Asset Protection

Not the physical assets but the key person or persons.

This protection provides your business with enough cash to preserve its asset base so it can repay debts, free up cashflow and maintain its credit standing if a business owner or loan guarantor dies or becomes disabled.  It can also release personal guarantees secured by the business owner’s assets (such as the family home).

Revenue Protection

A drop in revenue is often inevitable when a key person is no longer there. 

This protection provides your business with cash to compensate for the loss of revenue and costs of replacing a key employee or business owner should they die or become disabled.

Ownership Protection

The death of a business owner can result in the demise of an otherwise successful business simply because of a lack of business succession planning.  While business owners are alive they may negotiate a buy-out amongst themselves, for example on an owner’s retirement.  But what if one of them dies? 

Ownership protection can provide the continuing owners, or their nominees, with sufficient cash for the transfer of the outgoing owner’s equity to the continuing owners, should a business owner die, become disabled, or suffer a critical illness.

Speak to Rebecca Newton on 6201 5755 and let Prestige Wealth Partners help you protect your business future.

General Advice Disclaimer This article has been prepared on a general advice basis only. The information has not been prepared to take into account your specific objectives, needs and financial situation. The information may not be appropriate to your individual needs and you should seek advice from your financial adviser before making any investment decisions.

Income protection policies are available for salaried and self-employed individuals. Insurance premiums are usually fully tax deductible.

Prestige Wealth Partners can help you select the most appropriate insurance cover for you and your family.
What will happen if you are temporarily unable to work?

Insurance is never a luxury

You may go for years without making a claim, then one day the unexpected happens. No one can eliminate the devastating emotional impact of serious illness, disability or death, but if you have to deal with money problems as well, the situation can be much worse.

Having money available when you need it most is what makes insurance so valuable.

There are four main types of personal insurance

• Life insurance: a cash lump sum payable on death to help support your dependants.
• Total and permanent disability (TPD) insurance: a cash lump sum to help support you and your dependants if you are totally and permanently disabled due to illness or injury.
• Income protection insurance: a monthly income stream to help support you and your family if you are sick or injured and can’t work.
• Trauma insurance: a cash lump sum to help support you and your dependants if you suffer a specified major medical condition.

Income Protection Insurance

Income protection insurance (also known as salary continuance insurance) pays a monthly benefit of up to 75% of your pre?tax salary if you are unable to work due to illness or injury. Income protection may pay benefits for temporary conditions that affect you for weeks or months as well as for long?term illnesses.

Income protection benefits begin after a predetermined waiting period that you nominate when you take out the cover. Generally, the longer the waiting period the lower the premium. The policy will continue to pay the benefit for as long as you remain unable to work – up to a maximum predetermined period. This can be a set time frame such as two years, or be age?based, for example up to age 60. Generally, the longer the potential benefit period, the higher the premium.

Income protection premiums are usually tax deductible as an expense incurred in earning your income.

Speak to Rebecca Newton and let Prestige Wealth Partners find you the most appropriate policy for you and your family.

For more information about income protection insurance – and any other form of personal insurance – please download the Personal Insurance Fact Sheet provided by Financial Wisdom or contact Rebecca Newton using the form below.

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What would happen if you were injured or disabled and unable to work again?

TPD insurance pays a lump sum benefit for total and permanent disability due to illness or injury.

It is designed to help meet one off and ongoing living expenses, as well as cover special expenses such as medical and rehabilitation costs.

Insurance is never a luxury

You may go for years without making a claim, then one day the unexpected happens. No one can eliminate the devastating emotional impact of serious illness, disability or death, but if you have to deal with money problems as well, the situation can be much worse.

Having money available when you need it most is what makes insurance so valuable.

There are four main types of personal insurance

• Life insurance: a cash lump sum payable on death to help support your dependants.
• Total and permanent disability (TPD) insurance: a cash lump sum to help support you and your dependants if you are totally and permanently disabled due to illness or injury.
• Income protection insurance: a monthly income stream to help support you and your family if you are sick or injured and can’t work.
• Trauma insurance: a cash lump sum to help support you and your dependants if you suffer a specified major medical condition.

Total and permanent disability (TPD) insurance

TPD insurance pays a lump sum benefit for total and permanent disability due to illness or injury.

To receive a TPD insurance benefit, you must satisfy specific criteria to establish the genuine nature and extent of the disability (this can vary between insurers). These criteria usually include a range of permanently disabling conditions specified in the policy, such as paraplegia, as well as more general criteria relating to your total and permanent inability to work.

Trauma Insurance

Trauma insurance provides a lump sum payment if you suffer a serious, debilitating medical condition (specified in the policy) such as heart attack, cancer and stroke.

Generally, you will receive the trauma benefit providing you survive for a set period after incurring the condition. Receiving a lump sum can help people cope with a traumatic event and deal with issues they may have to face, such as:

• a change of employment to a less demanding role
• servicing a mortgage and other debts
• making home modifications if required
• paying for medical expenses.

Prestige Wealth Partners can help you select the most appropriate life insurance policy.

Personal and financial circumstances vary and it is important that your TPD cover is appropriate for your current circumstances. Policies differ greatly and it is important that you understand the features, terms and conditions of your policy.

Speak to Rebecca Newton and let Prestige Wealth Partners find you the most appropriate policy for you and your family.

For more information about TPD cover – or any other form of personal insurance – please download the Personal Insurance Fact Sheet provided by Financial Wisdom or contact Rebecca Newton using the form below.

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