BUSINESS OWNERS - CRITICAL ILLNESS INSURANCE PROTECTION
CRITICAL ILLNESS PROTECTION INSURANCE - FOR BUSINESS OWNERS
Running a small or large business can be both physically & mentally challenging choice of job - dependant on your type of work. If you are say a "1 man band" sole trader business or a medium sized business - you may have thought before about the implications of short or longer term critical illness on your business arrangements.
Nobody wants to think about being off work with critically ill - but unfortunately many Small Business Owners themselves do suffer from some type of critical illness during their working life. What would happen if you have any business loans or mortgages ? It is advised you consider taking our critical illness cover therefore being a small business owner.
Most Business owners cannot get by on limited government benefits...the figures will not add up. If you are off with any longer term illness - you will need to make arrangements for yourself.
Business Owners - Critical Illness Cover - Broker Advice
Critical Illness Insurance Cover for Small Business Owners
Critical illness cover - pays out a tax-free lump sum if you are diagnosed with a life-threatening condition for example some forms of cancer, heart attack, stroke, diabetes etc; as specified and listed in the Insurers policy. There are many types of plans avialable - some cover 3 main types of critical illnesses & others over 100+.
But there maybe lots of common situations when Critical Illness would not pay out - for example, if you had back problems or maybe a stress-related illness. Additionally, not all occurrences of the critical illnesses listed are covered, for example some lesser forms / early stages of cancer maybe not covered. Ideally you should have both plans if your budget allows this. For more information on this & costs talk to a professional broker here.
Business Critical Illness Protection Cover ~ Typical Key Features
- Designed to usually pay out a lump sum to help cover a loan or mortgage, a key persons lost salary or the business owner
- May payout immediately or have a waiting period upto 30 days to confirm diagnosis
- Critical Illness benefits are currently paid out tax free on claim
- Can include life insurance as well
- Cover Benefits may be level or inflation linked
- Medical evidence is required to underwrite before any terms offered
- Premiums may be none-reviewable, annually/5 yearly reviewable
- Waiver of Premium (where the Insurer waives/protects & covers your premiums after a deferred period of 4/8/13/26 weeks due to sickness or accident) so you do not have to pay them in claim if not defined as yet as a critical illness
Government benefits are very similar to unemployment insurance ie; probably insufficient and so people would probably see a very substantial drop in their income if they were out of work, even for more than a few months because of illness or disability.
Tell me about Critical Illness Insurance for Small Business Owners
Critical Illness Insurance For Business - Underwriting & Health Issues
You pay a monthly premium throughout the term of the policy. Cost depends mainly on:
# Your age - at the time you start the policy. Older people are more likely to suffer an illness, so pay more.
# Your sex - gender no longer affects rates wef 1/2013 via income providers.
# Your health - at the time you start the policy. If you have existing health problems you might be refused cover or have to pay more.
# Your Occupation - some jobs are more likely than others to contribute towards illness or accident - for example you regularly work at heights above 40 Ft
# Hobbies and lifestyle - for example, rock climbing is high risk, so you'll pay more.
# Smoker Status - for example, smoking makes you more likely to make a claim, so you'll pay more than a none smoker.
If your health is poor or your lifestyle is considered risky, you may be refused PHI cover or have to pay more than normal.
Business Critical Illness Insurance - Own Occupation Basis ?
Plans may include Total & Permanent Disability benefits. Normally the best terms are simply if you can't do your normal job "own Occupation" as say a self employed Accountant.
Some critical illness Total & Permanent Disability benefits only pay out if you can't do any work, but you would have to be seriously incapacitated for you not to be able to work at all. Others cover being unable to do any work for which are "Suited Tasks" similar to being say a vet.
Why not Income Protection Insurance - for Small Business Owners ?
If you can't work because of illness or disability, an income protection plan aims to pays out an income.
"PHI Income Insurance" tries to put you back into the same situation you were in before you were ill. But it does not allow you to be better off sick than well. So the maximum amount of income you can replace is the after-tax earnings you have lost, less an adjustment for any Uk State benefits you can possibly claim.
This means that dependant on the Insurer - 50%/65%/75% of your gross income but then paid out tax free. If self employed then this is usually based on last 12 months annual net profits ( beware of swopping these types of plans without advice). So check what you maybe entitled to based on your profits at the last tax self assessment.
Is PHI Income Insurance for a Business - the same as Accident & Sickness Cover ?
Accident, Sickness &/or Unemployment insurance (ASU), can also be referred to confusingly as Income Protection, if doing research online, although it is a different product. ASU cover will provide you with an income to meet your personal outgoings if you are off work sick, have an accident or are made redundant. It pays out a monthly benefit usually to cover your personal mortgage/loan and other related costs but for a limited period.
You may choose the amount of benefit you would like to receive - although there are some limits on the maximum amount. The premium will be a percentage of the amount of monthly benefit you would like to receive. NOTE: Benefits are usually payable for a maximum of 12 or 24 months - unlike Income Insurance PHI which may pay up to when you retire usually age 65.
Some policies will also allow you to choose whether you want to receive benefits for accident and sickness only, unemployment only or all three. Most policies will also have a 'deferment period' usually 30 days. This is the period of time you will have to wait after losing your source of income until you may claim the policy benefit.