You have put in a lot of effort and made many personal sacrifices to build and run your medical practice. Looking after your patients, managing your practice’s finances and getting the right staff have all been key to your success.
As with many practice owners, your wealth is generated by, and often locked up in, your business. Your business success may also dependent on billings generated from other partners and key practitioners.
From a life insurance perspective, there is a lot to consider, particularly if your practice is also dependent on income generated from other partners.
As a key person in your business, if you were sick or injured and unable to work and produce revenue, how long would your practice be able operate? Aside from your reduced ability to draw a personal income from the business, how would you cover your day-to-day business expenses such as rent, equipment hire or lease repayments and staff wages?
What would happen if something more serious occurred; such as a major health trauma or accident that took you out of the business for an extended period of time or perhaps forever? Who would inherit your business debts?
Alternatively, if you are in partnership and a key person generates a significant percentage of your practice’s revenue, what would happen if they died or were suddenly unable to work due to an accident or illness? Could you afford to purchase your deceased or incapacitated partner’s share of the business? Would your business survive the loss of a key person’s revenue?
With so much at stake, you now need to ensure you have all bases covered.
If you are ill or injured and unable to generate income in your practice, Avant’s Practice Expense Cover will reimburse up to 100% of your eligible practice expenses for up to 12 months if you cannot perform the duties specific to your own speciality. For example the usual practice and service company expenses including rent, utilities, industry fees, insurance premiums and non-income producing staff or contractors salaries.
In the event of the death or incapacitation of an equity partner of a practice, there is often a desire to buy out the practice from the effected party. A Buy & Sell legal agreement stipulates in advance how a partner’s share is distributed in the event of death of their incapacitation. This agreement can be drafted in conjunction with a Life and TPD insurance policy that provides the funds necessary to acquire the effected partner’s share.
Your practice could suffer a material financial loss in the event of the death, injury or illness of a key person. A key person may be a partner or associate in your practice or a key contractor who would be difficult or costly to replace. Avant Mutual Financial Services can assist in implementing this “key person” insurance through the purchase of Life and TPD insurance.
Practice Expense CoverLife and TPD
Avant’s Practice Expense Cover will protect your share of the everyday costs of running your practice, if you are prevented from practising due to illness or injury.
Your monthly sum insured is used to determine the monthly reimbursement you will receive if illness or injury prevent you from working or from working in your medical specialty. Practice Expense Cover gives you the flexibility to choose the monthly sum insured that best fits your needs or that you can afford, within defined limits.
You can select a monthly sum insured to cover your portion of your servicing and/or practising company’s eligible practice expenses. Eligible practice expenses include:
You can also choose to cover the net costs of a locum (a person sourced externally to your practice who is a direct replacement for you). The ‘net cost of a locum’ arises when the gross sales, income or billings generated by the locum, are less than the total fees incurred with hiring that locum.
The maximum monthly sum insured you can choose from is the lower of:
Your waiting period is the time between when you are first unable to work at full capacity and when your monthly reimbursement payments will commence. Avant’s Practice Expense Cover allows you to select from either a 30-day or 90-day waiting period. As your financial resources increase, you may choose to move from a 30-day to a 90-day waiting period, thereby reducing your premium.
You can choose a waiting period of either 30 days or 90 days.
Your waiting period will start on the earlier of:
To help you better manage your cash flow, you have the choice of two premium structures – stepped or level.
As a general rule, if affordability today is your primary concern, stepped premiums will allow you to purchase what you need today for less money. However, if you intend to retain your Practice Expense Cover plan for the long term, level premiums may save you money and your premiums may become increasingly affordable over time.
If you select stepped premiums, the amount you pay will generally increase at each plan anniversary date based on your age at the time of increase.
If you select level premiums, the amount you pay will be based on your age at your plan commencement date. Your premiums will remain the same until the plan anniversary date following your 65th birthday when they will convert to stepped premiums. Until this time, your premiums will only increase if you increase your monthly sum insured or Cover Indexation is applied.
The underlying premium rates for both stepped and level premiums are not guaranteed. However, once your Practice Expense Cover plan has commenced, you will never be singled out for a premium rate increase. Any increase will be applied to all plan holders to whom the same premium rate applies, after 30 days’ written notice.
There may be tax and/or cash flow reasons that make it beneficial for you to fund your Practice Expense Cover individually or through a company or trust. The choice is yours.
The ownership options available under Practice Expense Cover are:
Ownership can be transferred from one entity to another throughout the life of your plan with the authority of the current owner.
Your sum insured is used to determine the lump sum benefit payment the plan owner(s) will receive upon death, the diagnosis of a terminal illness or an illness or injury that results in a permanent disability of the insured life. Life Cover and TPD Cover gives you the flexibility to choose the sum insured that best fits your practice’s needs , within defined limits.
You can select any sum insured between the limits in the following table.
As a general rule, if affordability today is your primary concern, stepped premiums will allow you to purchase what you need today for less money. However, if you intend to retain your Life Cover and/or TPD Cover plan for the long term, level premiums may save you money and your premiums may become increasingly affordable over time.
If you select level premiums, the amount you pay will be based on the insured’s age at the plan commencement date. Your premiums will remain the same until the plan anniversary date following the 65th birthday of the insured life, when they will convert to stepped premiums. Until this time, your premiums will only increase if you increase your sum insured or Cover Indexation is applied.
The underlying premium rates for both stepped and level premiums are not guaranteed. However, once your Life Cover and/TPD Cover has commenced, you will never be singled out for a premium rate increase. Any increase will be applied to all plan holders to whom the same premium rate applies, after 30 days’ written notice.
Legislation and taxation are often changing and there may be tax and/or cash flow reasons that make it beneficial for you to fund your Life Cover and TPD Cover individually, through a company or trust. The choice is yours.
The two ownership options available are:
Your Life Cover plan and your TPD Cover plan can have different owners. Ownership can be transferred from one entity to another throughout the life of your plan/s with the authority of the current owner.
We recognise that many doctors are either self-employed or partners in a practice. If this is you and you have chosen Avant’s Life Cover and/or TPD Cover with the aim of protecting your business, it may be worth considering purchasing the Future Needs Guarantee (Business) Option. As your business increases in value or your business liabilities increase, this option will allow you to increase your sum insured each year, without the need to provide medical evidence or information about pastimes and occupation for assessment.
The Future Needs Guarantee (Business) Option allows you to increase your sum insured for Life Cover and/or TPD Cover, after a business-related event occurs, without the need to provide updated medical information or details about pastimes or occupation.
This feature is provided as an additional option of Life Cover and TPD Cover and if chosen, an additional charge will apply.
Under this feature, you may request an increase to your cover once per year until the plan anniversary date after you turn 70 for your Life Cover plan or 55 for your TPD Cover plan, for a number of listed business events if that event is consistent with your original reason for applying. For example, if your purpose for purchasing Life Cover was to provide a buy-sell arrangement should your business partner die, then the reason or business event for increasing your sum insured could be an increase in the value of your business. Increase requests will need to be made in writing no later than 30 days after the plan anniversary date of the year the business event occurred.
Your Life Cover and/or TPD Cover sum insured can be increased up to the maximum yearly increase amount according to the specific business event that occurred.
For full details of this option, please refer to the Life and TPD Cover Product Disclosure Statement.
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