Business expense insurance – an income stream to cover recurrent business costs
Business Expense Insurance allows you to insure recurrent business expenses on a monthly reimbursement basis, to help keep your business viable if you can’t work because of sickness or injury.
Whilst benefits are only payable for twelve months, this may just be the missing piece from your wealth protection puzzle!
How would your business survive without you?
What would happen if you had to take time off work because of sickness or injury?
Or worse, if you could never go to work again?
If you run your own business, the consequences could often be dire – for you, your family, and your employees.
Business Expense Insurance provides a monthly payment if you are sick or injured, helping you cover fixed business costs including:
- staff salaries (non income-producing roles)
- rent on your place of business
- interest on borrowings.
Some features available under this type of insurance:
A ‘partially disabled’ benefit will usually be available: with some providers it allows you to receive a benefit, even if you are working on a limited basis, provided you meet certain conditions.
A Recurring Disability Benefit, if available, will mean that there will be no waiting period if the same disability recurs within six months of the original claim.
Where Locum Cover is provided, it can reimburse the ‘net’ cost of employing a locum to maintain the business in your absence.
Group/ Packaging discounts are usually available if you and your family take out multiple policies at the same time with the one provider.
Did you know that Business Expense insurance may save you tax?
Business Expense insurance premiums may be tax-deductible, which could significantly reduce the effective cost of your insurance.
A Case Study: John’s story
“Five years after setting up as a painter and decorator, business was booming for John. He had taken on an apprentice and a lease on new premises. His ad campaign in the local papers was paying off, and he had a steady stream of work. At the same time his expenses were beginning to mount up. Then one Saturday, while opening the bowling for his cricket club, John fractured his right ankle. His doctor was adamant – painting was out of the question for the next few months.
Fortunately, he had taken out Business Expense insurance that would cover his ongoing fixed business expenses for up to $2,500 a month. This included rent, insurance, advertising and the phone lease.
When you’re off work, your business expenses still add up. If John hadn’t been covered he might have had to lay off his apprentice. Three months later John is back on the ladder – but his bowling career has been modified.”
Although the names have been changed, this is based on an actual claim – courtesy, Asteron.
What you need to do to secure your business future
To ensure that your business – and personal finances – are not left exposed in the event of you falling victim to an illness or accident that leaves you unable to attend to your normal duties for an extended period of time, contact Continuum Financial Planners Pty Ltd to arrange a meeting with an experienced adviser: ‘we listen, we understand; and we have solutions’ to your business expense insurance needs that we can relay through personalised, professional wealth management advice. Phone 07-34213456, or use our website Contact Us facility.
[This article, originally posted in August 2009, has been occasionally updated, most recently in November 2016.]