Business Ownership Protection

As a business owner, your focus is on running and growing your business. One of the most important yet often overlooked things that business owners do is ‘plan for the unexpected’. Protecting your business ownership means you need to plan for events such as death or disability of yourself or a fellow shareholder.

In the event of death or total disability of a shareholder, what happens to their shares?

If a purchase of shareholding is required, where will this money come from?

Business Ownership Protection will ensure that the necessary level of funds to purchase the shareholding of the deceased/disabled shareholder are made available. Nick will guide you through this process.

Key Person Protection

Often, a business will have at least one person who is key to the business’ success. Examples could include a major income-earning individual, the person who holds key supplier relationships or an innovative member of management who is key to the future direction and success of the business.

Who in your business fits into this category? (for starters, probably you!)

What would be the financial impact on your business if your this person suffered illness, disability or death?

Key Person protection will provide a monthly benefit to the business in order to help offset the loss of income or cover the cost of replacement of the Key Person due to illness, injury or death.

Business Debt Protection

With any business, having debt or personal guarantees is very common. In many cases, the personal assets and estate of a shareholder(s) will be at financial risk as well as the business itself.

Is your business carrying any debt?

How is the debt backed up? Personal Guarantees? Business Assets?

In the event of illness, disability or death of a shareholder, Business Debt protection will provide a lump sum to clear debt and personal guarantee responsibilities. This will not only protect the business but the family wealth of shareholders.

Owners Income Protection

As a business owner, you rely on your business to pay you your income. In the event you or a fellow shareholder is out of action for a short-medium length of time, cover such as Key Person Protection will provide your business with up to 2 years of regular monthly payments to cover loss of income or the cost of a locum to keep your business running.

What happens if you or a fellow shareholder suffer a long term illness or disability?

Can your business afford to pay you an income until Age 65 or 70?

Owners Income Protection will take the financial pressure off your business by paying you a regular monthly income. It is important that your Personal Income Protection works with the same time frames of your Key Person cover so there is no short fall of cover or overlap (in which you would be wasting money on premiums).

Self Employed ACC Levies

As a self employed person you will be paying self employed or shareholder employee ACC Levies each year. Not only is this cover limited to accidents, there are also some huge shortfalls that most business owners aren’t aware of.

Shortfalls of ACC Self Employed Cover

1) You are not insured for your ‘Own Occupation’ (meaning if you have an accident and you cannot perform your normal occupation but can perform perhaps a ‘lesser role’ then your ACC payment will potentially stop. ACC’s definition is “Fit For Selected Work’ which means work that a GP has certified you are fit to perform.

2) There are no guarantees - There are no guarantees of payment amount or payment term and the maximum sums that ACC will cover a Self Employed person for are often well short of their actual income.

3) Accident cover only (80% of long-term disabilities are due to health related events).

4) The formula to calculate how much ACC will pay you is based on your earnings 4 weeks prior to your injury. (A large proportion of injuries happen whilst people are on holiday, being self employed, your income may drop when you take a holiday).

Restructure your ACC Self Employed Cover

It is possible to restructure your ACC accident cover to save on premiums and incorporate private income cover. This will cover you for your ‘Own Occupation’, give you more certainty of how much you are covered for and more importantly, cover you for health related events which are responsible for a whopping 80% of long-term disabilities.

Protecting You and Your Family

As a proud father, I’m all too familiar with the increased financial responsibilities when you start or grow a family. More often than not, the financial responsibility falls on one person. If something happened to the key income earner, the family would be under instant and significant financial stress. I get great satisfaction from helping kiwi families.

Events that increase your family’s financial risk can include; growing your family, increasing your mortgage debt, dropping to one income (when raising kids), saving for an education fund, not having a savings buffer.

Reviewing your cover

In business and in life things are constantly changing. You may already have cover in place but if you have not conducted a review within the last year or 2 it may not be ‘fit for purpose’. You may be under-insured and at financial risk, you may be over-insured and overspending on insurance premiums.

Why review your cover? (Four most common reasons)

1) I HAVE MY INSURANCE WITH A BANK

Generally, insurances offered by banks are lower ‘quality rating’, cover fewer conditions, have tougher claims definitions and policy wordings. Premiums are ‘at best’ are the same or more expensive.

2) I HAVEN’T SEEN MY ADVISER FOR A WHILE

Advisers get paid annually by the insurers. If they are not reviewing your cover and your situation has changed (eg. increased your mortgage, grown your family) then your cover is not fit for purpose.

3) I GOT MY INSURANCE DIRECT/ONLINE

Your cover may not be fit for purpose as you may not be aware of all of the products on the marketplace, how they differ and which are best to solve your financial problems should the worst happen. Also, do you review your own cover annually?

4) I GOT MY INSURANCE THROUGH A WORK SCHEME

Usually a workplace scheme is a generic offering and not specific to your financial risk needs. If you leave your workplace and need to obtain new cover you may then have pre-existing conditions that will be excluded.

I recommend reviewing your cover annually or when circumstances change.