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6th December 2018 - Private Wealth
There are over two million self-employed Australians in the workforce today. There’s no doubt that running your own business can be rewarding, but without the safety nets and security offered by larger corporations, it’s important to consider financial protection as part of essential business planning. When small business owners consider their insurance needs, they immediately think about protecting physical assets such as cars, equipment and buildings. However, they often miss the most important asset in their business – themselves and their key people.
People are the most important asset in any business. If a person is lost to a business due to death, sickness or disability, it can have a significant impact. It may lead to a drop in revenue, loss of clients, and could even lead to the bank calling in any debts or liabilities.
As a self-employed worker, you are not entitled to workers’ compensation. This scheme only provides for illness or injury that may arise out of employment, and by law the self-employed do not meet this definition. Income protection will generally cover up to 75% of your monthly income, in the event that you are temporarily unable to work due to illness or injury. It is paid out as a monthly benefit, which can be used to cover ongoing personal and business financial obligations. Premiums are tax deductible and you can also choose to fund these through your superannuation.
Being self-employed means that you not only carry the personal obligations associated with providing for your family, but also the business expenses that may need to be paid out in the unexpected event of your death. This includes any outstanding accountant, lawyer and adviser fees, taxes and any overheads relating to employee salaries, suppliers and lease payments. It’s important to ensure the proper safeguards are in place, so there is no risk to your estate. A death in the business may also result in a change in the ownership structure. If a business owner dies, their shareholding rights may revert to their estate. For the remaining business partners, this may mean that they are now in business with people they had no intention of being in business with.
If purchased as a stand-alone policy, life insurance is not tax-deductible for the self-employed. However, income protection and business expense cover are both tax deductible as stand-alone policies.
Remember, your business is unique, so it’s important to talk to your Elston adviser to assess your situation and work out the cover that best meets your needs.
If you would like more information please call 1300 ELSTON or email info@elston.com.au and an adviser will be in touch.
This material has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in this material is General Advice and does not take into account any person’s individual investment objectives, financial situation or needs. Before making an investment decision based on this advice you should consider whether it is appropriate to your particular circumstances, alternatively seek professional advice. Where the General Advice relates to the acquisition or possible acquisition of a financial product, you should obtain a Product Disclosure Statement (“PDS”) relating to the product and consider the PDS before making any decision about whether to acquire the product. You will find further details of the service we provide and any cost to you within the Financial Services Guide. Any references to past investment performance are not an indication of future investment returns. Prepared by EP Financial Service Pty Ltd ABN 52 130 772 495 AFSL 325 252 (“Elston”). Although every effort has been made to verify the accuracy of the information contained in this material, Elston, its officers, representatives, employees and agents disclaim all liability (except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this material or any loss or damage suffered by any person directly or indirectly through relying on this information.
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