Taking Care of Yourself and your Business in times of Upheaval

Income protection insurance is an essential safety net in times of illness or when suffering/recovering from an injury, and this applies to workers across the globe. Income protection insurance in Australia serves more or less the same purpose as in other countries, including the Middle East. Although much of the Middle East offers robust social security systems, these systems are usually designed to offer a minimum level of cover in the event of illness or injury and may not cover things such as school fees or outstanding loan obligations. 

Keeping afloat in your hour of need 

As every business owner knows, business doesn’t get put on hold if the person at the helm is sick or incapacitated; they simply must adapt, and, if not, find a reliable way to maintain a percentage of their earnings to meet day-to-day expenses. A fully comprehensive income protection insurance policy will generally cover the policyholder for:

• Mid to long term illnesses – In combination with a decent amount of health cover, income protection insurance will usually cover day-to-day expenses, mortgage/rent payments and school fees – the essentials. This type of cover enables the policyholder to focus on recovery without the added burden of worrying about how they are going to cover household and other crucial expenses.
• Injuries/Accidents – Accidents resulting in injury that require more than average recuperation times can happen at any time to anyone, anywhere, and this is why income protection insurance should form an integral part of any financial planning budget. 

It should be noted that not all income protection policies are created equal, so due diligence must be carried out to ensure it meets all essential needs. Income protection insurance generally covers a proportion of someone’s wage and can have stringent periods of cover, which may be limited, so it’s important to speak to an insurance provider or broker in person before committing to any one policy. 

Policy Limitations and Caveats

Although the benefits of an income protection policy are clear, it’s important to briefly highlight the scenarios where the policy will not pay out:

• Unemployment/Redundancy
• Pregnancy
• Pre-existing conditions
• Non-disclosure of conditions during application
• Conditions/accidents caused by drug/alcohol abuse

The above list is by no means exhaustive; again, it makes sense to clarify any exclusions with an insurance provider or broker before signing on the dotted line. 

Do I really need Income Protection Insurance?

If you are asking yourself the question above, the answer is probably yes. Running a business can be stressful, but not nearly as stressful as being unable to earn an income whilst ill or convalescing. If your current lifestyle would be affected if you were unable to earn an income, income protection insurance is a sensible financial choice. If you own a business or are a partner, you may be able to offset the premium cost (or a proportion of it) against the company tax bill at the end of the month. Even if you are not a shareholder, some insurance to counteract the unexpected is good fiscal planning.