Personal risk insurance isn’t in case you lose your life, it can assist you should you also lose your ability to earn an income.
Personal risk insurances to consider include:
- Life insurance – which pays a lump sum on your death
- Income protection insurance – this replaces your income if you are unable to work due to sickness or injury. It provides a monthly payment of usually up to 75% of your pre-tax income. You can generally choose the waiting period (this is how long you must be unable to work before the insurance begins to pay you) and the benefit period (how long the policy will pay you if you are unable to work)
- Trauma insurance – which pays you a lump sum on the diagnosis of a specified non-pre-existing illness or injury, generally including heart attack, stroke, cancer, and paraplegia. This can be taken as a stand-alone policy, or attached to a life insurance policy. This insurance was created when it was realised that medical advances were resulting in patients increasingly surviving major health problems, but that the financial cost of survival was prohibitively high for patients (e.g. medical costs, medicine, time off work, rehabilitation etc).
- Total and Permanent Disablement Insurance – Insurance pays a lump sum on the insured becoming permanently disabled due to illness or accident
The key to creating an effective personal risk insurance plan is to visualise what a secure financial future would look like for your family if you were to die or could no longer earn an income.
Aspects to consider include:
- Ongoing living expenses
- Repayment of debts
- Special expenses like schooling
- Financial costs of fulfilling the aspirations of your dependants/others close to you
In the case of you suffering a severe illness or injury, you should also take into account the potential cost of:
- Home nursing
We help you calculate how much money you’ll need to fund your vision of comfortable living for your family should you die or no longer earn an income due to serious illness or injury. We’ll then assess if you can afford to self-fund your vision, or whether you need to consider transferring some or all of that financial risk to an insurance company.
Our job then is to research the major, reputable insurance companies to find the insurances which provide you and your family with the right level of protection, including the definitions, clauses and exclusions which best suit you. Of those insurances which meet your needs, we obtain quotes to ensure we recommend cost-effective solutions.
A major consideration and expense(s) for any business can be their insurance policies.
Some insurance policies such as workers compensation and public liability are legally compulsory while it is up to employers to make choices about insuring physical assets such as cars, buildings and equipment.
However, key person cover on the business owners and other key individuals in the event of disability or death is often neglected. Whilst individually the owners may hold personal insurance contracts these are owned by the individual and do not protect the business. This can be a serious oversight as there can be long term, costly and disruptive issues in the absence of a key person.
A strategy to protect all owners is to implement a Buy Sell agreement. This legally binding contract comprises two components:
Sometimes called a “Business Will”, a Buy/Sell Agreement is a legal contract for business owners that states what will happen should a partner leave the business due to death or disability which usually contains a valuation method for the business.
A funding mechanism is needed to make a Buy/Sell Agreement effective as possible. Insurance can be a
convenient means to fund the agreement without incurring a large financial burden.
Business succession agreements
Case Study: Protect your business ownership through a Buy/Sell agreement
Suitable for: People with equity in a business they own with other people
- help ensure orderly business succession if an owner is disabled or passes away
- provides funds to compensate beneficiaries for the transfer of equity in the business to remaining owners in the event of disability or death
Group Life Insurance
Group Life Insurance provides a lump sum benefit in the event of total and permanent disability, or death. The policy is owned by the employer for the purpose of providing the death benefit to the beneficiary or deceased estate, or the employee in the case of total and permanent disability.
In the case of death, proceeds from Group Life Insurance can be used to pay funeral expenses, pay off debts and provide future income for children or a spouse. In the case of total and permanent disability, a Group Life Insurance payment can help protect against financial hardship as the employee adjusts to a new life situation.
Group Salary Continuance
Group Salary Continuance (Income Protection) Insurance protects against an extended inability to work due to serious illness or injury, by providing a monthly payment. Cover is provided worldwide, 24 hours a day, 7 days per week, 365 day per year.
Policies typically cover up to 75% of the individual’s salary and can also include a superannuation contribution component of up to 10%. We can tailor the policy to your requirements by varying the waiting period and benefit period. Common waiting periods include 30, 60, and 90 days, whilst benefit payments may continue for 2 years, 5 years or to Age 65.
Personal Accident Insurance is another type of income protection insurance and is typically included in an EBA or Workplace Agreement. Willis can assist employers in tailoring a solution that meets the requirement of any Workplace Agreement to ensure your ongoing compliance and provide financial protection for your employees.