The Role of Life & Personal Insurance
Business and life both involve risk. One way of dealing with risk is to obtain appropriate insurance. How insurance is arranged or held can have significant implications on who receives the benefits of the policy and what taxation implications arise as a consequence of receiving an insurance payout.
It is equally important to consider insurance on both the personal and business level.
On the personal level, you should ensure that you have sufficient coverage in place to provide for your family and/or any other dependants in the event of your death or disability.
On the business level, often a higher degree of risk exists, and accordingly a number of insurances are often required. There are a number of key insurances that should be considered when operating a business, including but not limited to:
- Product liability insurance;
- Public liability insurance;
- Property/contents insurance;
- Business interruption insurance;
- Cross insurance;
- Workers compensation insurance;
- Key personnel insurance.
Additional insurances may be applicable depending on the type of business being operated. It is essential that you also consult with your insurance broker to obtain advice on what insurances you should hold.
Perhaps two of the most often overlooked insurances when it comes to business include:
- Key Personnel Insurance
This type of insurance covers the death or disability of essential personnel of a business. This type of insurance should be considered as the death or disability of essential personnel of a business can cause significant financial stress and expense, often including the loss of production and/or customers plus the cost of finding and training replacement staff.
- Cross Insurance
This type of insurance covers the death or disability of other owners. This type of insurance should be considered when you are involved in a business that has multiple owners (directly or indirectly). This type of insurance deals with situations where one owner dies or becomes incapacitated thereby often requiring that person’s interest in the business to be sold. Cross insurance can be used to assist the remaining owners in buying out any such interest.
How We Can Help
We can help by:
- Identifying potential risks and insurance to cover those risks;
- Structuring insurance arrangements to ensure they are held by the appropriate party to maximise the return on an insurance claim and minimise the taxation consequences of any such claim.
Please note that we cannot offer financial advice or advice on insurance products. You should seek the advice of your insurance broker in that regard.
For further information please contact: