Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Income Protection Insurance May Not Be Fit For Purpose

Business Owners Income Protection Insurance May Not Be Fit For Purpose!

Many business owners have taken out Income Protection Insurance (to protect their families) that in the event of a claim only a portion or in some cases no benefit would be paid out in the short term. What’s worse is many company owners will pay these premiums for life not realising that they have wasted their money.

The issue arises around the insurance company’s definition.

For Loss of Earnings Cover if you are disabled they will calculate your benefit payments as the lesser of:

1. (A-B) X 75%; where:

• A = pre disability income

• B=monthly income and other income received while disabled

For Loss of earnings Plus Cover they will calculate your benefit payments at the greater of;

1. (monthly benefit- B); and

2. (A-B) X 75%; where:

• A = pre disability income

• B=monthly income and other income received while disabled

In either case any income you receive from your business would be offset against your Income Protection Insurance and mean that the benefits you were counting on from your Income Protection Policy may not be paid out come claim time.

Des Morgan a Business Insurance Consultant with The Portfolio Company Ltd said

“It is important that Business Owners income protection be aligned to their shareholders buy sell agreement. As an example if the buy sell agreement stipulated that in the event of an illness the shareholder salary would continue for one year then your Income Protection Plan should have a 365 day wait agreement before benefits are payable . This longer waiting period will substantially reduce your premiums.”

He said another solution if you have a mortgage is to take out Mortgage Protection Insurance which pays your Mortgage payments in the event of illness. Many insurance companies allow insuring either 40% of income or 110% of your mortgage payments and this benefit for many insurance companies would not be considered other income when claiming against your Income Protection Benefit.

For further information on Business Insurance go to www.theportfoliocompany.co.nz/shareholder-protection

ENDS


© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Government: New Year Border Exception For Seasonal Workers In The Horticulture And Wine Industries

2000 additional RSE workers to enter New Zealand early next year employers must pay these workers at least $22.10 an hour employers will cover costs of managed isolation for the RSE workers RSE workers will be paid the equivalent of 30 hours work a week ... More>>

ALSO:

Grey Power: Is Disappointed To Learn Of More Bank Closures

Many older people are being left without essential services because of cost cutting and the march of modern technology. It is now expected that most banking transactions can occur via the internet or telephone. Jan Pentecost, President of the Grey Power ... More>>

ALSO:

Economy: Supply Chain On Brink Of Overload Says National Road Carriers

The New Zealand supply chain is on the brink of overload and it looks like the upcoming peak imports season may push it over the edge says National Road Carriers Association (NRC) CEO David Aitken. “Worldwide supply chains are in disarray,” says Mr Aitken. ... More>>

Stats NZ: Annual Goods Trade Surplus At 28-Year High

New Zealand’s annual goods trade surplus reached a 28-year high of $2.2 billion as imports tumbled in the year ended October 2020, Stats NZ said today. “This is the largest annual surplus since the July 1992 year, driven mainly by much lower ... More>>

ComCom: How Real Is That Bargain?

The Commerce Commission urges retailers and consumers to think hard about the bargains being offered as ‘Black Friday’ and Christmas draw near. Black Friday has now overtaken Boxing Day in terms of retail spending, according to data from electronic ... More>>

Stats NZ: Births And Deaths: Year Ended September 2020

Births and deaths releases provide statistics on the number of births and deaths registered in New Zealand, and selected fertility and mortality rates. Key facts For the year ended September 2020: 57,753 live births and 32,670 deaths ... More>>

ALSO:


Forest & Bird: Kākāpō Wins Bird Of The Year 2020

The nation has voted and Aotearoa New Zealand has a new Bird of the Year. New Zealand’s moss-colored flightless parrot has climbed to the top-spot for the second time in Forest & Bird’s annual Te Manu Rongonui o Te Tau/Bird of the Year competition. ... More>>