Key points
- Personal insurances protect cashflow, lifestyle, and family in case of injury or death.
- Key types include life, TPD, trauma, and income protection insurance.
- They support estate planning, philanthropy, and financial security for business owners and executives.
Many people see the benefits of car insurance or health insurance but don’t always have personal insurances.
What happens to your cashflow, retirement plans, or your family if something happens to you?
In this blog we look at the main types of personal insurances and how they can be a cost-effective tool that benefit business owners and high-income earning executives and managers in a number of ways.
What are the main types of personal insurance?
The four main types of personal insurances that successful business owners and individuals should consider are:
- life insurance
- total and permanent disability insurance
- trauma insurance
- income protection or salary continuance insurance.
Some super accounts include policies for some of these insurances, although they often provide only default or basic cover.
Why are insurances important?
If you were seriously injured or to die suddenly what would happen to your business, your lifestyle and your family?
If you are a business owner and were unable to work for a period or permanently, what would happen to your business cashflow or the ability of others to carry on the business?
Similarly for salary earners, if there is less money coming in and additional medical and other expenses, could you maintain your lifestyle? If you don’t have the protection of having insurances in place, what things that you currently enjoy could you give up?
Personal insurances are a cost-effective tool to help provide financial security, business risk mitigation and contingency planning, and assist your estate planning wishes and retirement goals. They can help to protect and maintain wealth.
For example, if you were to die suddenly, you may want a trust fund for your children’s education or other needs. You can nominate that trust fund as the beneficiary of your personal insurances.
Naming a charitable organisation or an individual as a beneficiary of an insurance policy can be a more proactive way to achieve your philanthropy or wealth transfer goals than leaving money or assets to them in your will as insurance proceeds often don’t form part of the estate.
Who should have personal insurance?
Personal insurances can be useful for many people including business owners and high-income earning executives and managers.
These insurances are often more of a priority for people under 50 because these people typically do not have sufficient cash flow, a strong asset base or appropriate trust funds to maintain their current lifestyle or future desired lifestyle if something were to happen to them.
How can a business adviser or private wealth adviser assist with personal insurance?
You can purchase personal insurances direct from insurance companies or through a broker. They can provide information on policy options, benefits, and premium prices.
The advantage of talking to your private wealth adviser or business adviser is they can help ensure your personal insurances properly align with your business planning, estate planning and retirement planning.
Personal insurances can be extremely useful, but you only want to have the right insurances and the right amount of cover to protect yourself and others without wasting money on premiums.
If you are a business owner, personal insurances are an important consideration in your business contingency plan and for any buying or selling agreements.
Your wealth adviser or business adviser can also help you decide which insurances should be held within a Super account or held personally, and how to structure tax effectively whilst managing cashflow.
Have a question or need help with your transition to retirement?
Pitcher Partners’ wealth advisers and business advisers have extensive experience in helping clients to get the right personal insurances to help protect their lifestyle, family and retirement needs.
