As with the start of any year, a lot of us will have been documenting what we want to achieve in the next 12 months – both on a personal and business level.
Whilst this is extremely important to do and helps us set a clear path for future goals, I can never fully understand why often these plans don’t take into consideration the importance of also reviewing risk management strategies that may or may not be in place...
It may seem a silly question, particularly when you have insurance in place and are paying a premium, but it is a question that should be regularly asked when reviewing your insurance benefits.
Two years ago, I met with prospective clients who had what appeared to be comprehensive cover in place for both their business and family. Their policies had been underwritten the previous year and they felt comfortable with the benefits they had and the insurer they were with. They were only meeting with me as their previous advisor was no longer selling insurance and they recognised the importance of regular reviews...
The answer to this question is not a simple Yes/No response as every person’s circumstances and beliefs are different.
Depending on the insurance contract you have, it is often necessary to transfer children when they reach a specified age to their own policy. This is a simple process where a letter is sent from the policy owners (usually yourselves) parents and child to the insurer, requesting that your child’s benefits be transferred to their own policy....
I can still remember the day in November last year when I got the call from Winston advising that his seven year old son had just been diagnosed with an unexpected rare cancer. It is times like this that I wish I was a better writer and could convey the raw emotion that both he and I felt in that moment of time.
Like a lot of people, when that conversation was had, he didn’t really understand what insurances the family had in place, or the benefits that could now be claimed. He and his wife had recently gone through an insurance review and made changes to their policies, and these changes included $50,000 trauma cover (a lump sum payment on diagnosis of a major illness) for their children. Private medical insurance was also in place.
In New Zealand we have over 470,000 SME businesses. They make up more than 99% of all businesses in the country and account for about 60% of national employment. They rightly deserve to be called the ‘backbone’ of our economy.
During my time in the insurance industry, I have consistently seen the problems that these business owners face, when they are unable to work, due to either sickness or accident.
Every working New Zealander contributes to ACC, either through their PAYE, or through invoiced levies, based on the industry they work in. Why then do I have my self employed clients, accountants, and other professionals, tell me that this compulsory insurance will not work for most SME business owner at claim time?
There are a number of reasons.
Kiwis are known for their ingenuity, and having the attitude of “She’ll be right”.
A lot of people when phoned by their advisor to organise an insurance review, have the misconception that they are going to be ‘sold’ more product and will end up paying higher premiums if they agree to an appointment.
Even more people will tell you ‘that’s all sorted’. However when questioned as to what benefits and what levels of cover they have in place, they are unable to give an answer.
Because they pay a monthly premium, it must be right.
But is it right?
An area of risk for all businesses is when a person responsible for a large percentage of the business revenue (whether an owner or employee) is no longer able to perform their duties.
These people are generally referred to as key, and are recognised as having knowledge, work experience and business contacts which are considered uniquely valuable to the company...
A large number of SME business owners overlook the importance of having a business will. If a business partner dies, the impacts can be huge. Immediate effects will be felt in regards to the day to day running and continued success of the business, and quite often because of the uncertainty and lack of planning for this type of event, the outcomes for both the remaining shareholder/s and deceased estate can be catastrophic...