There are a number of insurances to look at when in business. An example for Pharmacists to consider might be insuring the lives of their business partners so the business partner’s estate can be paid their share of the business in the event of death.
Another major issue that could cause a pharmacy business to struggle is solved by having income protection insurance. Sure, a locum can be brought into the business to work in your place and be paid possibly a lesser amount for their work but would the business be able to cover your personal expenses: your mortgage, living expenses and medical costs?
Protecting your income as you near retirement is just as important as protecting your income early in your career.
Income protection insurance comes across most people’s radar when they’re starting out in their career. Often, people take out this type of policy when they buy a house, so if a serious illness or a bad accident strikes, your children and your spouse are covered.
But income protection can really come into its own when we’re nearing retirement and often more prone to accidents, illness and injury. According to the 2012 update of the Australian Bureau of Statistics’ Australian Health Survey
If we suffer a trauma as we’re preparing to finish work, without income protection insurance all our plans for a comfortable retirement can vanish as savings are eroded paying for medical bills or funding everyday living expenses.
We’re also living longer, which means it’s increasingly important to have enough money to provide for ourselves financially after we retire. According to data from the World Bank [2], someone born in Australia in 1960 can expect to live to 70.82. Contrast this with someone born in 2010, who can expect to live to 81.70. So people born today need to provide for themselves for a decade longer than someone born in the ‘60s.
Today, we’re also more likely to help our dependents as we approach retirement. Over the past 23 years, the number of people aged between 18 and 34 who still live at home has risen from 19% to 23% [3].
So we’re trying to help the kids financially and support elderly parents, all while saving for retirement. It’s a big ask – an even bigger one if you become ill.
It pays to hang onto your protection plan
Income protection and trauma insurance are both great ways to protect your lifestyle from sickness or injury. As you approach retirement, this protection becomes even more critical:
- If you have regular bills and lifestyle expenses that rely on your ongoing income.
- If you suffer a serious illness like cancer or a heart attack, which could stop you from working for a long period.
- If you’re using your last few years in the workforce to reduce your debts and bump up your retirement savings.
by Michelle Summers, Senior Financial Adviser
[1] Australian Bureau of Statistics, Australian Health Survey: Updated Results, 2011-2012
[2] World Bank life expectancy figures, downloaded 20/2/14 http://data.worldbank.org/indicator/SP.DYN.LE00.IN
[3] Australian Bureau of Statistics, June 2009, Home and away: The living arrangements of young people, June 2009.
If an illness or accident ends your career and you don’t have income protection insurance, the quality of your future lifestyle could be dramatically lower.
Disclaimer
Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.