When you run your small business it makes good sense to have income protection insurance, that way you know that you are covered in the event of something happening to you. As your business grows it is essential that you keep updating your income protection insurance.
In the event that someone is unable to work, income protection insurance will cover you by paying your salary.
Some business partnerships have an agreement amongst themselves that all the partners should have income protection insurance. This is to protect them, because most partners share the firm's profits and by having income protection insurance, should one of the partners be unable to work then no-one loses out financially, as he/she is still able to draw a salary from the business.
Small business owners have a lot to consider when it comes to Insurance cover.
According to a 2006 survey by the Investment and Financial Services Association (IFSA) less than half of small business owners feel they have adequate insurance cover. This is mainly due to the fact that consumers do not fully understand insurance.
Most people are under the impression that income protection is too expensive and many consumers do not know that some premiums are tax deductible. The types of insurance that is usually tax deductible are income protection and business expense insurance. By having these two types of insurance adequately covers the business owner.
Income protection covers up to 75% of their personal income, and business expenses insurance will take care of fixed costs like rent and electricity.
By combining these two types of policies, the business owner covers both their personal and work expenses, and can reduce their tax bill.
It is essential that all small business owners review their income protection insurance needs regularly. The amount of cover that you have needs to keep up with your expanding business. So consult one of our friendly advisers who will guide you in the right direction.