It’s almost the beginning of April, so you have probably seen the ads from various providers about the expected increases to health insurance premiums that happen each year on April 1 when health funds adjust their premiums, invariably determining that increases are needed to cover any increases in payouts and costs they have had over the previous twelve months.
What does health insurance have to do with business owners, other than their need for health insurance just like anyone else? Nothing, but if you are going to be reviewing your insurance policies anyway, you may as well review your entire insurance coverage at the one time. So, if you are a small business owner, what sort of insurance should you be considering?
Health Cover: as already mentioned, health cover is a good idea for anyone, but especially for a business owner. While employees may have cover and support from an employer in the event of health issues, business owners may suffer business losses and financial hardship during any extended health issue that impacts the business.
Income protection: as mentioned above, without recreational or sick leave that most employees enjoy, business owners face a double whammy during a health crisis, both losing income and facing potentially high medical costs. Income protection insurance provides a percentage of your regular income for a particular period of time in the event that you lose the capacity to earn income.
Life Insurance: like health insurance, life insurance doesn’t relate just to business owners; however with superannuation funds and some employers providing varying degrees of health and life insurance, it is important to note that many self-employed people don’t have company insurance cover or even have a superannuation fund that they are contributing to. For many start-ups, cash flow is a key concern, and insurance and retirement planning are often put into the ‘once the business is making a profit, I will get…’ category.
Public Liability: generally, employees are covered by their employer’s insurance in the event of an accident or error that causes loss. As a business owner, it is your responsibility to ensure that the business, and any employees it might have, is protected against any claims that may be made. If your business is structured as a partnership or you are a sole trader, you should already be aware that you are personally liable for any business debts. This includes any legal proceedings that result in potentially substantial payouts, so public liability insurance could save you from losing everything you own.
Property Insurance: like home insurance, property insurance will protect your business from potentially ruinous loss through fire, theft or damage. If your business has substantial physical assets, property insurance provides much needed protection.
Key Person Insurance: also called Key Man Insurance, this is insurance that a company or small business can purchase to cover the loss of a key person in the business. This cover is also beneficial for partnerships where a buy/sell agreement may require that the remaining partners buy out the shares of a partner as a result of a specific event such as death or permanent disability.
You may decide that some of these insurance options aren’t suitable to your circumstances, but now is the perfect time to at least give them all some consideration in order to protect your financial future and that of your business.
By Jennifer Lowe