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If you run your own business and cannot work due to illness or injury, who pays the bills?

What is Business Expense Insurance?

If you run your own business and cannot work due to illness or injury, who pays the bills? Whilst some expenses within your business will stop if you stop, there are many fixed bills that will continue to pile up when you aren’t generating an income. Business expense insurance helps to cover these fixed costs. After a waiting period, you can receive a monthly benefit for up to a year, helping you keep your head above water while you get better.

How does it work?

Business expense insurance can be used to cover some expenses to keep your business going.

What are the benefits?

  • Business expense insurance will cover 100% of the fixed expenses as nominated by you. This is significantly more than a personal income protection policy which only covers 75% of your income.
  • This cover will help you continue your business in the event you are unable to work due to illness or injury. This will give you up to 12 months to recover or find an alternative solution for your business.
  • Holding your cover through your business means insurance premiums are tax deductible to the business.

What should I be thinking about?

  • Most insurers will need you to provide evidence of your fixed expenses when you apply for this insurance. This may include copies of bills and financial statements.
  • The benefit amount for this cover needs to be an accurate estimate of regular, fixed expenses. If this estimate is incorrect, you may be underinsured.
  • Payment at claim is normally limited for business expenses to12 months, as opposed to an income protection policy where you can receive ongoing benefits up to age 70.
  • Benefits paid may be subject to tax and only the net amount will be available for paying your business expenses.

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Important information regarding this information

This information is of a general nature. It does not consider your personal objectives, needs or situation. It does not represent legal, tax or personal advice and should not be taken as such. If it has been provided to you with a Statement of Advice (SoA), you should rely on the personal advice in the SoA.

Care has been taken to provide up to date and accurate information relating to the subject area however BR Advice Pty Ltd (ABN 30 612 056 523, AFSL 488655), Blue Rock Private Wealth Pty Ltd (ABN 95 166 927 055, AFSL 452733) and their representatives make no representation as to its accuracy or completeness.

Published: February 2021.

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