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Disclaimer

This is not advice. Items herein are general comments only and do not constitute or convey advice per se. The information contained in these articles is for guidance only and should not be relied upon without obtaining professional advice having regard to your direct circumstances.

 

Small businesses 'ignoring income risks'

Almost three out of four small business owners are leaving themselves exposed by not taking out income protection insurance, the Investment and Financial Services Association (IFSA) says.

While some 98 per cent of respondents to ISFA's income protection survey of Australian small businesses said they were aware of at least some insurance options, 69 per cent said they had no protection at all.

The survey also found that just one in four small business owners could maintain their lifestyles for more than six months if they suffered serious injury illness or disablement.

ISFA chief executive Richard Gilbert said he was taken aback by the widespread lack of understanding about the benefits of income insurance.

"In the words of one respondent, 'income is always temporary, but the expenses are always permanent'," Mr Gilbert said.

Some 47 per cent of respondents were unaware income protection is tax deductible.

"Why would you simply write a bigger cheque to the tax office than you have to before thinking about taking out income protection insurance?" Mr Gilbert said.

"Clearly, as an industry, IFSA has more work to do in assisting small business to understand how they can mitigate risk to income."

The prospect of income protection could also prove a deterrent to employees seeking opportunities elsewhere, Mr Gilbert said.

"It may well be that extending IP (income protection) to employees is a cost effective way to also insure your business against `poaching' of staff by your competitors," he said.

AAP, August 3 2006

 


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