Personal insurance, as distinct from other business insurances discussed in section 2.6, pay out in the event of your death, disability or some other disastrous event occurring. Some people feel they do not need insurance as nothing will happen to them or that they are independently wealthy and do not need to have insurance. You should be aware, however, that if you are unfortunate enough to suffer a catastrophic event, it will have a drastic effect on your business, your family’s ability to earn an income, and/or the level of care that they are able to maintain.
There are many other forms of insurance and types of cover that can be obtained depending on your situation and profile including critical illness insurance, long term care insurance and health insurance. If you are considering personal insurance, you should discuss your options with your financial planner or business insurance providers to ensure you’re properly covered and understand the circumstances under which you may or may not make a claim (e.g. extent of injuries needed to be deemed permanently disabled).
An example of the benefit of having this type of insurance was where a business owner suffered a debilitating disease that forced her to be in and out of hospital for two years. The business in question was a large commercial real estate agency that had a significant sales business and a very large commercial rent roll. When the owner of the business fell ill the business suffered significantly as she was the backbone of the business. However, as she had the right insurance policy, the insurance company paid a periodic payment to top up the business owner’s income for a significant period to cover the losses that the business suffered. This allowed the business owner to maintain her family and ensure that they worked through the illness and did not lose their business or other assets.
Sadly, there are many examples of where not having this insurance has forced a business owner to either sell their business at a great loss or, even worse, lose their business entirely. Personal insurances may seem expensive but they are there to protect you in unforeseen circumstances. You should ensure that you have proper insurance to protect you and your business and you should consult with your financial planner and accountant to make sure that you have the right policies in place for your needs.
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