An area of Financial Planning often overlooked or discarded is that of Asset Protection.
The reasons for this are twofold either we don’t believe we will get sick have an accident or die or we are just not aware of the types of cover that are available.
In short asset protection comes in the form of insurance cover and it can cover us for events such as sickness, accident, trauma ( heart attack / cancer as examples), disablement and death.
The key reasons for having these covers are usually around providing income for either yourself and/or your family, providing a lump sum to pay out debt, to provide funding for future expenses such as education or retirement.
If you do not have appropriate plans in place in this area we may be forced to sell assets to provide for income or pay debt ….hence the term “asset protection” don’t be forced into selling assets in these circumstances for a small relative cost you can insure and for key covers this can be done via your superannuation fund.
The other area of asset protection which is important and is often not addressed is that of “buy/sell insurance” this insurance protects a surviving business partner or shareholder in the event of disablement or death of the other business partner/ shareholder. It works by having an agreement in place which is essence provides a lump sum on disablement or death so that the surviving partner can payout the family/ estate of the exiting partner / shareholder.
There are various ways the insurance and agreement are structured and tailored advice should be sought. The main reason for having this insurance in place is that often we find that the remaining partner having no capacity or inclination to borrow funds to pay out existing partner this leads to either a close of business and / or legal dispute. The cost of this cover is usually insignificant compared to the potential benefits and peace of mind the agreement and insurance provides.