Do you get landed with debt if your business partner can't work?

By Greg Hahn – Apex Financial Adviser.

It's common practice to insure your business assets – premises, machinery, computers. These are all seen as integral parts of a functioning business and important to its smooth running. But have you considered what effect the loss of a key staff or business partner member might have? Could losing them be just as devastating as losing that integral piece of equipment?

In 2008, it was estimated that 1,880 businesses in New Zealand ceased operation due, at least in part, to an injury to the owner or a key staff member. You might well say the chances of it happening are slim and not worth worrying about. Well, the statistics say otherwise. It's estimated that 5 in ten males and 7 in ten females are likely to become disabled due to an illness or accident before they turn 65, preventing them from working for at least a month.

There are 450,000 enterprises in New Zealand, of which 68% have no employees and 30% employ between 1 and 19 individuals. So, given the prevalence of small to medium-sized businesses and given that it is common for these businesses to have a reliance on key people (the director, the sales manager or maybe a specialised sales person or technical staff member) it makes sense to consider being covered for their loss. After all, the loss of someone with specific, non-transferable skills can be every bit as damaging as a fire or burglary.

Did you sign a lease with a committed term? Do you run an overdraft or have a business loan? Both can fall on the shareholder that is still working and is in the business. Banks quickly get very nervous when an income earner suffers serious illness or loss of life

Having a defensive Continuity insurance, provides protection against just that – continuity. It can be set up for businesses of any size and affords the owner revenue protection, debt protection and ownership protection. It should be an essential part of your business planning.

Greg Hahn is an Apex Financial Adviser, specialising in insurance protection, and smart loan advice for individuals, families and businesses. Get in touch with Greg to discuss your personal situation 027 524 7970 or gregh@apexgroup.co.nz


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