With so many insurance options available it is often tough choosing the one that suits your specific needs and requirements.
There are a couple of things that one needs to look out for, though, regardless of what type of cover you need or which company you eventually decide on.
By being aware of what the pitfalls are for taking out life or disability insurance – especially if you run your own business, are a sole proprietor or are a key person within the company, will give you a rough guide to getting the kind of business insurance you require for your specific set of circumstances.
You will need to:
- Check the company selling you the policy and whether it is registered with the Financial Services Board.
- If you have a financial intermediary you can also call the FSB to check out their credentials.
- If the intermediary is a licensed and certified financial planner this will indicate that they have the right kind of post-grad qualifications in financial planning.
How are premiums tackled by your business insurance provider?
- There is no one size fits all business insurance and disability cover.
- Companies that advertise policies that are the same for everyone need to be given a wide berth.
- Policies ought to be structured to suit the individual needs and requirements of individuals, what type of operation they run and what kind of industry they are in.
- The cost of the policy will determine how comprehensive the cover will be.
- Usually gender, age and medical history are taken into the equation when life insurance premiums or key personnel insurance are calculated.
- Take into account how the premium increases are structured – if the premium should appear to be affordable on the face of it the annual increases could eventually place it out of your price bracket – that is why you need to check the current as well as the future premiums of any policy – always ready the fine print!
- Be wary of policies that have a footnote under a table that illustrates increases, as additional factors could lead to further increases without providing better cover.
- If you take key person insurance or life insurance which is integrated with the status of your health, ensure you understand exactly how it works.
- You need to know that if your health deteriorates or does not improve – will this count against you in the sense that your premium increases, but the level of cover does not improve?
- Find out about the period of guarantee linked to the policy as this provides assurances that you won’t suddenly be confronted with unexpected premium hikes.
If you are employed full time, run your own operation or are a key employer in a company you might already have disability cover.
You need to find out if this cover is in place and what protection it offers you as there are legal limits as to how much cover you may take out.
You don’t want to be paying for benefits you might never be in a position to claim for. Check how disability is treated in each policy; some policies provide cover if you cannot continue your basic work but others pay out only when you cannot do other work which the insurer thinks you should be able to do given your training, experience and qualifications.
Business insurance is a tricky business – ensure you have the right cover for all eventualities – and remember there is never an insurance policy that has a one size fits all as every operation and every individual comes with a unique set of circumstances.
