Protecting your income and your business

You wouldn’t drive your new car out of the showroom without first insuring it. Nor would you go on holiday without first ensuring you are properly covered in the event of a burglary or other disaster. But when it comes to protecting our income, there are many who simply shrug their shoulders and say: “it’ll never happen to me”. Is that a risk you want to take? Consider, for a moment the following example. You are aged 30 and earning R30 000 p.m. You will work until you turn 65. What are you worth? We’ll assume no salary increases for the rest of your life in order to make the calculations simple. The income you will generate is a whopping R12 600 000! The unexpected can strike at any moment and it is vital to be prepared for it and to plan for situations where your income is at risk. Protection against loss of income is one way of ensuring your future.

If you run a small to medium-sized business, you know, if something happens to you it could mean the end of your business. Loss of income protection is not a luxury; it is a business-necessity. Consider the consequences for your business and your family should you require extensive medical treatment. It could ruin your cash flow and jeopardise your entire operation if you are unable to work for a lengthy period. Will your business handle such a setback? It’s a tough question that you need to answer. There is a simple, elegant, solution.

How Loss of Income Protection policy works

  • The Income Disability Benefit pays you a monthly income for temporary or permanent disablement. Even if you can still perform some of your previous work activities, it will still make a partial payment. You can choose when this benefit comes into effect. 
  • The Overhead Expenses Benefit takes care of the running costs of your business. This benefit allows you to contribute to the day-to-day expenses of your business and comes into effect in month two of your disability. These expenses can vary and include:
    • Rent
    • Equipment leases
    • Vehicle or other hire purchase or lease payments
    • Salaries and bonuses
    • Office running costs

The benefits of Loss of Income Protection include:

  • A regular income if you suffer illness or accidental injury and are unable to work, which results in a loss of income.
  • The plan is flexible to suit your needs as you decide how much income benefit you need; How soon it should start; How long the cover should last.
  • Running costs of your business are covered by the overhead expense benefit until you return to work; A suitable replacement is found; 24-months have passed since you became disabled.
  • If you claim for disability or overhead expense benefits, it does not affect any of your other benefits.

The Tax implications

Contributions to the Income Disability benefit may be claimed as a tax-deductible expense. Money paid to you will then be taxed as income.

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