‘Too expensive’, ‘too unlikely’, too many ‘what-ifs’ and ‘how will it work?’ are just some reasons small and medium business owners avoid trauma insurance. But think about this: for 4 male partners, aged 35, 45, 50 and 55, there’s only a 52.4% chance that all will remain healthy in the next 10 years. What impact will that have on their business? It’s time to rethink the need for trauma insurance.
Trauma benefits can play a significant role in business-risk management outcomes, but it can also seem easy to ignore because the trauma “what-ifs” aren’t clear-cut black and white.
By comparison, it’s easy to quantify a specific result for a business if an owner dies or is disabled —because they will no longer be physically present in the business. An owner’s potential to have a presence in the business, even after a trauma, is a challenge when planning. But plan you must.
Why consider trauma insurance?
Firstly, come claim time, where other products may not pay due to their structure and breadth of benefits, trauma may well be the only product that can pay and therefore fill a gap. There are 3 main types of “living” insurance products:
· total and permanent disablement (TPD)
· income protection
If one of those can’t do the job (either fully or partially) of securing the desired level of financial security, then ideally another will fill the gap (as much as is possible).
Secondly, as mentioned in the beginning, the statistical risk is just too high to ignore.
Both these reasons mean that, as a business owner, you should have trauma insurance.
In business succession planning, if you choose to leave out trauma insurance, and review your needs later, that’s your choice. But do so understanding what it is that trauma insurance offers you and where it fits in business succession planning.
The secret to succession planning sums insured
If, as a business owner, you accept the concepts of trauma insurance, then you should be able to work out relevant sums to insure for your business’s circumstances.
Thankfully, the methodology for this in the business scenario is rather more straightforward than personally.
Contact Southern Advisory to discuss trauma insurance further - it might just plug the gap to keep your business in business.
Source: “Trauma – a business insurance necessity” by Kaplan Education Pty Limited, December 2009; Actuarial research commissioned by Aviva Australia.