Self-employment is on the rise, and Insurance People director Katrina Church says advisers need to be looking at whether their self-employed clients are protecting their assets in the best possible way.
Church said that in her time as an adviser, she has seen many clients with stand-down periods that would not bring money in quick enough to replace their lost income. She said that part of the job is to stay informed around various product options, but also to ensure that all of the client’s personal and business obligations are considered when setting up a policy.
“When we traditionally look at four, eight and 13 week stand-downs, there are many self employed people who are sitting on 13 weeks when the reality is that they really need to be on a four-week period, because they need to be getting the money in quicker,” Church said.
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“I think the adviser force needs to take a little responsibility in whether we’ve actually served the self-employed market as well as we can, and whether we need to challenge ourselves a little further there in the future.”
“There is no point in just sharing someone’s taxable income,” she explained.
“They live their lives through their businesses, their phones, their internet, mortgage, vehicles – they’re all put through the business, but are we actually insuring that? Are we making sure that those things are taken care of when someone can’t work?”
Church said that part of her own work has been around ACC’s CoverPlus Extra, which will pay up to 80% of taxable income if a client has an accident and can’t work. She said that advisers need to be mindful of cover when setting up alternative options, and always ensure that the client can access money quick enough to allow them to meet their financial obligations.
“Invariably, you’ll find that a self-employed person comes to you at the end of their tether rather than at the beginning,” she said.
“There are a bunch of people that have gone ahead and reduced people’s ability to have weekly compensation, and used those premiums to purchase a product which is possibly better. But have they really got the money coming in quick enough? Have they ensured that there is money coming into the business, as well as the individual?”
“If the self-employed market is being hit, then we need to serve it differently,” she added.
“I’d ask all advisers to start having that conversation, because New Zealand is full of self-employed people – and they’ve just increased. One of the areas of jobs that have disappeared are among a lot of female occupations, and many of them are going into self-employment. So we need to ask, how do we best serve them with this type of product?”