New Year new plan

With the New Year under way, it’s a good time to ensure you have everything in place behind the scenes so that you can focus on running your business. So what’s your plan for protecting your income should you be unable to work?

If you or your partner are unable to work for a period, become seriously ill or are suddenly faced with substantial medical bills, it’s important you have a plan to ensure you can cover your costs and replace any lost income.

Some common solutions include:

• Dipping into savings.
• Re-mortgaging the home.
• Calling on wider family for support.
• Sending a non-working partner into the job market.
• Relying on the public health system, ACC and/or sickness benefit for help.

For others, these are not satisfactory. In these cases, insurance is a well established and practical option.

Here’s a quick overview of the most common policies available to protect you and your family.

Income protection/loss of earnings

While ACC will cover 80% of your income if you’re injured in an accident, it pays nothing if you can’t work due to a non-accident related illness.

Perhaps surprisingly, most people, even in the construction industry, are more likely to be off work through illness rather than accident. Income protection (also known as loss of earnings) will replace your income while you’re unable to work.

For self-employed contractors, this is critically important cover. Doing it right, in combination with optimising your ACC cover, can make this a very affordable option.

For specific types of injuries, you can also choose to receive a lump sum payment.

Health insurance

Many people are happy to rely on our public health system, which is fantastic in many ways. Unfortunately, speed is not one of them and when you’re facing a serious illness, a long waiting list is the last thing you want to deal with.

With private health insurance, you’ll be referred to a private hospital and have your diagnostics, cancer treatment, surgical and/or non-surgical procedures paid for.

If you’re an employer, providing health insurance to your staff makes them more likely to stay with you (and we know good workers are important to keep hold of) as well as ensuring they’re back at work quickly if they do get sick. With the right plan, pre-existing conditions can be included, making the cover very attractive.

Key person

Are you, or is someone else in your business, critical to its successful operation? What would happen to your business if that person was unable to work?

Key person cover ensures that the operation of the business can continue (workers get paid, jobs get done) while that person is recovering, or a replacement is found.

The money can also be used to pay off debt and employees before closing the business in an orderly manner, rather than being forced into liquidation/ bankruptcy.

Life insurance

Pays a lump sum to your beneficiaries in the event of your death. In cases of terminal illness, some policies will pay out prior to your death so you can make the most of the time you have left.

Disability/trauma

Pays a lump sum on diagnosis of specified illnesses. This can be used for anything while you recover, including paying extra expenses or for alternative treatments, reducing debt, replacing a partner’s income if they have to take time off , or even going on holiday to speed up your recovery.

In a nutshell

Being sure your family will be looked after if something happens to you is vitally important to most people. The right insurance can give them peace of mind and guarantee their future financial security.

What combination of cover is right for you will depend on your own situation and the level of risk you’re comfortable with. In every case, speaking with a financial adviser will help ensure you’re making the right decision for you and your family.

Builtin New Zealand is a specialist in insurance & guarantees for builders & tradespeople. For more information visit www.builtin.co.nz, email Ben Rickard at ben@builtin.co.nz or call him on 0800 BUILTIN.