What does business life insurance cost?

23 February 2015
Of the two million-odd businesses in Australia, the majority are small operations which underpin the various owners? family lifestyles. As such, business owners who fail to protect themselves against risks they have no control over risk exposing their business and family to burdensome debt. This is where business life insurance comes in.

What is business life insurance?

Business Life Insurance encompasses three separate insurance products, which can be taken out as a package or bought separately. They are:


Key Person Insurance

Key people within your business are valuable assets because of their knowledge and contribution to the profitability of the business. That?s why business owners insure them. Key people can be insured for death, trauma and/or total and permanent disablement. The reason for this coverage is either loss of revenue or capital purposes to pay off an existing debt.

Think about it: a small business might borrow a sizeable amount of money from the bank on the back of anticipated new trade or tender successes, thanks to one particular specialist employee. If this main person becomes sick and can?t work again, how would the business find a replacement person in a hurry to pay back the large debt to the bank? Key Person Insurance could be used to solve this problem.


Business Partner Insurance

This type of cover is generally known in the industry as Buy/Sell Insurance. It kicks in with the untimely death of a business partner. Its purpose is to provide dollar funding to the surviving business partner to buy out the deceased partner?s share in the business. This type of insurance provides an easy solution to a potentially complicated situation.

Death, trauma and/or total permanent disablement can all be covered.


Business Expenses Insurance

Many business expenses are fixed – rent, lease, staff wages etc – so if something happens to the main income earner, it can be a big problem for the continued running of the business.

Business Expenses Insurance is usually only available to businesses with less than five income-producing employees. It?s a particularly important type of insurance for small businesses which often can?t fill the gap if income is suddenly not being generated. Large business, on the other hand, can usually cope and are not so adversely affected by staff illness or accident.

What does business life insurance cost?

The cost of your business life insurance products will depend on a number of factors, including:

  • Whether you are a blue collar or white collar worker
  • The specific industry and associated risks
  • Whether you are male or female
  • Your age
  • Your health
  • Your hobbies
  • Whether you smoke or not

As an indication though, Canstar’s 2015 research found the following average monthly premiums for a 35 year old non-smoker, assuming stepped premiums, for a:

  Motor Mechanic:

Type of Insurance Sex Average premium
Key PersonM$167
Key PersonF$168
Business PartnerM$239
Business PartnerF$241
Business ExpensesM$181
Business ExpensesF$269

Source: Canstar Business Life Insurance report, 2015


Type of Insurance Sex Average premium
Key PersonM$145
Key PersonF$146
Business PartnerM$208
Business PartnerF$209
Business ExpensesM$84
Business ExpensesF$124

Source: Canstar Business Life Insurance report, 2015


Remember, though, that premiums will depend on your personal situation – this is a very general indication only. Make sure that you check out our Business Life Insurance ratings report for further information about policies that represent outstanding value.

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