Q As a business owner and a parent with a family which includes three children under the age of 10, I think I may need to take a serious look at my life cover requirements. What factors do I need to consider in assessing my situation?
A Nobody likes to consider their own death, certainly not when you may have people dependent on you and where the financial impact of your death is potentially destructive to those left behind.
Your family and your business depend on you and your ability to work and earn an income. Without you, they will both suffer. It's a sad fact that people do pass away while they still have family dependent on them. It's an even sadder fact that financial difficulties are often heaped upon the family's distress when a breadwinner dies. However, proper planning means financial difficulty can be eliminated for those you love. Sound financial planning will ensure they continue to prosper and enjoy the standard of living you are currently working so hard to provide for them.
As a business owner, parent, guardian, spouse or partner you will no doubt have many people who are depending on you. Sometimes when we are busy with our day-to-day lives we forget the financial value we bring to our family. A selection of the factors you will need to consider are:
Will the mortgage still need to be paid? Even if you have some form of life cover in place to pay off the mortgage, is that enough? Will your family have a regular source of income if you are no longer around? Is your business saleable? If it is, what value may it achieve and how long will it take to sell? If your spouse is working and earning an income, will they be in a position to continue work ing or will they need to give up work to look after your children? What social welfare payments will your family receive? Are business loans held in the company name or personally held? Do you have investment properties that are in negative equity? What value have you managed to accumulate in your pension? What other investments do you have?
These questions are only a small sample of the issues you need to consider but it will begin to illustrate to you the detailed analysis that is needed in order to assess your life cover requirements.
The question of whether or not you should have life cover in place is really very simple. Will your family of business suffer financially in the event of your death?
If the answer is Yes, you should start exploring your options now.