An Australian-first key person income insurance solution for the small business market is the showpiece of the latest round of product enhancements from BT Financial Group.
Responding to what it says is a significant underinsurance gap in the Australian market (see: BT Tackles SME Underinsurance), BT has created Key Person Income. The new product, offered as an alternative to the traditional Business Expenses cover, provides a monthly benefit to a business for up to one year, if the business owner or key income-generating staff member becomes sick or injured.
Unlike Business Expenses cover, which is used for fixed business expenses incurred during the period of disability, Key Person Income insurance is offered based on the portion of revenue the business owner generates for the business. Key employees can also be covered for a percentage of their remuneration package. The cover leverages BT’s two-tiered total disability definition, based on its 10 hours and duties criteria. Customers can choose between 30 or 90 day waiting periods, and cover up to a maximum of $60,000 per key person can be selected.
“Small businesses have been able to insure for negative financial impacts if a key person dies, or suffers from total permanent disability or a trauma event,” said Scott Moffitt, National Life Insurance Product Manager. “These insurance products have focused on severe or permanent disability, yet businesses are more likely to be impacted by short-term disability. Key Person Income is an innovative product that addresses this business need.”
“With the launch of Key Person Income, there is now an opportunity for advisers to help their small business clients with putting in place a risk management strategy to protect revenue in the event of short and long term disability,” Mr Moffitt said.
The new product has been launched alongside a range of other enhancements to BT’s flagship insurance offer, BT Protection Plans. Among the other changes are:
- A new advanced partial payment feature for income protection claimants eligible to receive the Total Disability Benefit, whereby a payment will be issued just two weeks after the end of the waiting period (equivalent to a fortnight’s pro-rata monthly benefit)
- A new Child Care Benefit for Income Protection Plus policy holders to cover child care costs for a maximum of six months over the life of the policy
- Improved Future Insurability Benefit criteria, allowing clients to increase their monthly benefit in line with income increases every 12 months, up to a maximum of 15% each year
- Improved waiting periods for income protection policies with the own occupation definition
- Updated trauma definitions for angioplasty and severe burns
In line with upcoming changes to superannuation legislation, BT has also introduced amended benefits and definitions for BT Protection Plans held inside superannuation. The new definitions take effect from 19 May 2014, but existing clients who currently hold these benefits will not be affected.
All the enhancements, along with the new Key Person Income product, are available from 19 May 2014. To coincide with the changes, BT has issued a new PDS and adviser guide. Click here to visit the riskinfo Resource Centre to view these documents.
