What if Your Business Partner Died?

Imagine if your business partner had died yesterday. What impact would that have on your business? Who would inherit their shares? That person would be your new business partner. Do you or they want that? Could you buy them out? Do you have an agreement on the value already? How would you pay for it?

This situation is very common and can be a disaster but with good advice your business and it’s shareholders can avoid this situation.


Should I Compare my Policy on Price Alone?

When insurance premiums change it’s natural to think are you getting the best value for money.  But, insurance should never be bought on price alone and here’s why….

The first consideration is to know the premium structure.  Most policy premiums step up as you age, i.e. they are age-based.  But some policies have a flat/level premium across the life of their policies, or until a specific age.  Long-term, you are usually better to keep Level Premium policies unless you have an immediate need to get as much as cover as you can, for a fixed outlay.

And there are other considerations too:

  • When will the cover expire?

  • Will it pay out earlier for a Terminal Illness?

  • Are there any Special Events included, e.g. you are able to increase your cover, without medical information required, if you marry, have a child, take out a mortgage, or get divorce.

  • What do the policy Exclusions say?  These can vary a lot between insurers and you must know these.  Some refuse to pay for certain hazardous pursuits, or countries visited. 

  • Can the insurer change the Policy Terms, e.g. as advances in technology change treatments?

  • Will your pre-existing health conditions be assessed at claim time, meaning serious uncertainty at a time of most need?

  • Have the premiums been reduced because of higher sum insured, or other covers like Disability or Trauma insurance have been included?

If you need help, here are some options:

Finally, you may wish to check out the insurance company’s financial strength for reputation paying claims.  There are many ways to access insurance products and the level of service and support will depend on the resources available at your preferred point of purchase.

So you can see it’s not just about price.  The price differences often highlights the product competitiveness between insurers, as well as the product simplicity offered by some.  Don’t be fooled into changing insurer, or your existing policy, before you examine the differences and get good advice.

Source: Life-info

Is Your Business Really Protected?


Besides ticking off your business essentials – premises, bank, accountant, transport, and tools – have you remembered to protect your most valuable asset, your ability to earn? What would you do if you were unable to work because of sickness or injury? Who would pay the bills, provide for your family and keep the business trading?

Most people are aware of the need to insure against property loss or damage, but what about the threat to your most valuable human resource – you, and the people who are vital to the continuing success of your business? 

The loss or temporary loss of key personnel can have a dramatic effect on any business, and can even be terminal.

People themselves are often the most important asset for a business, and their loss, temporarily or permanently can have a huge impact. 

This type of protection is often overlooked.  The consequences of this oversight can be often times disastrous to the business owners, the staff and families. 


YOU'RE THE BOSS: It’s your name on that commercial loan agreement and you’re ultimately responsible for making sure your business commitments are met.

COVERING YOUR COSTS: You may have been struck down by illness, injury, or your business affected by a natural disaster, but you’ll still need to ensure that your ongoing business expenses are met, and your debtors paid. Business continuity can be essential if you’re to keep your customers happy, and your reputation intact. Making sure it’s ‘business as usual’ will also help pay your mortgage and monthly bills at home, and preserve your family’s lifestyle.

RELYING ON OTHERS: Most businesses have key personnel with special skills or knowledge, without whom the business may struggle to operate effectively, or even survive at all.

LACK OF PLANNING: Without a proper insurance plan, the future of your company might well be at stake. Have you got a succession plan in place? This can help make sure your wishes for the future of your company and assets can be followed through, leaving your family and your business debt-free, and providing financial resources for your chosen successor if they need the funds to purchase the shareholding left by your departure.


BUSINESS DEBT: Nothing can cripple, or even sink, a business faster than the inability to pay loan instalments, tax bills, rent, salaries and suppliers.

BUSINESS CONTINUITY: Productivity can be seriously disrupted when a key person becomes seriously ill, has an accident or dies.

BUSINESS OWNERS: Death or disability can force change on your ownership structure, making it necessary to draw on cash reserves and assets. It is vital to formalise any shareholder/partnership cover through a buy/sell agreement to ensure capital is distributed as agreed.


Are you aware that there is an alternative offered by ACC to your default option? 

At Zenith we work in conjunction with ACC and yourself to create a tailored ACC cover for self-employed people.

You gain three main benefits:

1. A potential saving on your levies

2. More certainty at claim time

3. Cover for sickness as well as accident 

You are in control - you choose the amount of cover and you receive 100% of this agreed amount at claim time. Your current ACC cover only pays up to 80% of your previous year's earnings. In addition, you do not have to prove loss of earnings at claim time which makes the process far less complicated. 

Contact us today to find out if you qualify. 

Income Protection Ignored by Most Kiwis

(Source: NZ Herald: Jun 30, 2012)

    Half of all adult Kiwis have life insurance. They can imagine the catastrophe if the family breadwinner died.

    Yet we face a much bigger risk financially than death. That is losing the breadwinner's income through "disability" from illness or accident. As I wrote a few weeks back, ACC will replace income in cases of accident. Yet Kiwis are much more likely to be prevented from working through illness. Just look at the people in hospital beds - most are there through illness.

    Online research by insurer AIA last year found that 87 per cent of us have car insurance, 50 per cent life insurance and only 11 per cent income protection insurance.

    Ask any insurance broker and the stories come tumbling out. Michael Cave, managing director of Cave Financial Consulting, cites the case of a 47-year-old customer who suffered a stroke while playing Pictionary. The man couldn't return to work in his profession as a rock driller for the rest of his life.

    Thankfully his income protection insurance will support him financially until retirement.

    Income protection insurance is quite simple. If you lose your income due to temporary or permanent disability through illness or accident you will be paid up to 75 per cent of your previous salary for the period of cover, which could be two years, five years, or until age 65. Related, but not as comprehensive, are mortgage protection insurance and total permanent disability (TPD) insurance.

    People will often take life insurance cover and reject income protection insurance as "too expensive", says industry analyst Russell Hutchinson of Chatswood Consulting, even though it is the more valuable cover. They underplay their chances of having an accident or falling ill.

    Other common reasons that people don't take out income protection or related insurances, says Cave, are that they:

    * don't know what it costs

    * get confused by analysing too many policies, or

    * fear they won't be covered for an illness they've suffered in the past.

    The irony, says Cave, is that most people would take out insurance to cover a machine in their business that would produce $1 million worth of net profit over the next 20 years. Yet they don't cover their own income, which is worth roughly the same.

    There are two main ways to buy income protection insurance: through a bank, which will usually only sell its own policy, or an insurance broker (financial adviser), who will sift through a number of policies from insurance companies.

    As a very broad-brush statement, the bank policies may be cheaper and often include redundancy cover for the mortgage, but can have more exclusions.

    The advantage of an insurance company policy is that it will usually be more flexible, and providing clients disclose all relevant medical history, they will be covered for all conditions unless specifically excluded. Someone like Hutchinson, who has asthma, may have that condition excluded or the premium loaded to cover it, but he will know what he's covered for in black and white. Or at least he will if he has read and understood the policy, which too few people do.

    Knowing exactly what you are not covered for gives you the ability to say, "Hey, I don't think that's fair", when the policy is taken out, says Conor Sligo, director of LifeDirect.

    I can hand on heart argue that it's best to buy income protection and related insurances through an insurance broker. A professional who deals with this insurance day in, day out can help navigate the matrix of options, which would fill the rest of this page if I spelled them all out.

    Some of those options are straightforward, such as:

    adding trauma cover, which pays a lump sum if you're diagnosed with a named illness

    waiver of premium benefits - so that your premiums are paid when you're off work

    whether you want to cover your own occupation or any occupation, and

    if you want your KiwiSaver contributions covered.

    Other more complex considerations include "buyback" options, which allow the cover to be reinstated after a claim. Some people may need cover for working overseas, or if returning to their home country to live after being permanently disabled, says Sligo,

    A broker will ask whether you want premiums that are fixed for a certain number of years, says Cave. And insurers such as AIA, Tower, and Sovereign offer various "split cover" options, which may, for example, cover your mortgage only for the first 13 weeks and then your income after that.

    Another thing to be aware of is that most policies cover "indemnity". That means you only get 75 per cent of your current income if you're incapacitated, even though you may be paying premiums on a higher salary you were getting when you took the policy out.

    For this reason some people choose an "agreed value" policy, where the amount to be paid is set in stone at the outset. This is particularly important for self-employed people who may keep their income artificially low.

    Income protection insurance isn't anywhere near as cheap as standard life insurance, which sometimes puts people off. Some cover is better than none, however, and the price can be cut back by increasing wait periods (which are much like excesses), or reducing cover, Hutchinson says.

    Policy costs are the length of the proverbial piece of string. I spent quite a bit of time this week playing round with hypothetical scenarios at Quotemonster.co.nz, which insurance brokers can use to compare policies (Quotemonster.co.nz is not open to the public but the Lifedirect.co.nz system is based on the same database of policy details). A policy for a 45-year-old employed male covering $50,000 income (75 per cent of the total) for claims of up to five years with a four-week stand-down period would cost from $76 a month - providing he didn't work in a high risk industry.

    Add $100,000 of "trauma" cover and then the premiums move up to $141 a month. Change the stand-down period to 13 weeks and the premium drops to $102 a month. Reduce the trauma cover to $50,000 and the premium drops further to $75.

    Some people prefer to cover themselves to age 65 instead of for a maximum benefit of five years. Using the same scenario above with $50,000 trauma cover and a 13-week stand-down period, the monthly premium for a five-year benefit period is $75.26, and to age 65 is $90.

    The trick with insuring to age 65 is that more than 90 per cent of claims are concluded within two years, says Hutchinson, which means that you're paying to insure against a risk that isn't as likely as you may think. Nonetheless it gives people peace of mind.

    It's unusual for insurance company policies to include any type of redundancy cover. Asteron does, however. For the above income protection scenario the Asteron policy with $3000 a month redundancy cover for six months cost $40 more a month than it would without.

    My final word on cost is that in some cases income protection insurance premiums are tax-deductible, which brings the cost down indirectly.

    There are, of course, fish hooks with income protection insurance. For example, if ACC pays weekly compensation following an accident, then the income protection policy won't pay. This is more logical than it sounds. Insurance companies factor in ACC when pricing the premiums, says Cave.

    Conversely, if the loss of income is due to redundancy or illness, the income protection payout will usually cancel out any Work and Income benefits.

    Another not uncommon issue is claims declined for non-disclosure. In one case heard by the Ombudsman last year a company turned down a claim on the basis of "non-disclosure" because it said that the client hadn't properly revealed a "sore hand" a decade earlier.

    The insurance company argued that it wouldn't have provided cover for the hand had it known about the non-disclosure.

    Insurance companies may void the entire policy from inception in cases such as this.

    They can also decline an unrelated claim on the basis of "non-disclosure".

    Celebrating Our New Auckland Office

    Zenith Financial Group has recently relocated and upgraded its Auckland office to Titirangi, West Auckland. The team are happy with the move which will afford visitors far more parking options than our Parnell office in addition to a more suitable office configuration.

    Please note our land-line number has changed to 09 8178814 and should be up and running soon.

    We are located above Vevo Cafe on Level 1, 402 Titirangi Road, Titirangi, West Auckland. Pop in and say hi!