MFAS provides our doctor’s practices with regular insurance reviews. We couldn’t help noticing, after recent reviews of GP practices, that there are some pitfalls when it comes to protecting the human capital within their practices.
Here are Seven Common Practice Insurance Pitfalls that we discovered during our reviews – maybe they are affecting your business also.
Has your practice grown?
Hopefully your business is growing. Your Practice Insurance cover needs to grow with it. If your insurances haven’t been reviewed for some time, it is possible that the cover on your business no longer reflects its true value. Ask yourself, if something happened to your business and you had to make an insurance claim, how would you and your partners deal with the shortfall of inadequate insurance cover?
Have the personnel in your business changed?
Whether a business is growing or not, one thing that is almost certain to change over the years, is personnel. Without a regular review of your Practice Insurance, the situation can easily arise whereby a business’s insurances no longer cover all current business partners and staff. Are there people within your business who are uninsured? What is your plan should one of them became disabled or pass away?
How do you value your business?
If you have insurances to protect the estate of a deceased partner, you want to make sure that these are paid out promptly and at a fair value. Have you thought about the process for valuing the business? And is this documented in a shareholder or partners’ agreement?
Who owns your business’s insurance policies?
This is something many people give little thought to. In most cases insurances will be owned by the practice. While this an obvious solution, it does mean that, in the case of a staff member’s death, the estate of the deceased is at mercy of the business to pay out the insurance proceeds in a timely and expedient manner. A legal agreement to back this up this arrangement may provide greater certainty as to outcome.
Does your business have clearly defined policies regarding disablement?
We all think the worst will never happen – but sometimes it does. So, in your business, is it clear to all partners and doctors, what the policy is if a staff member cannot work due to disablement? Each business should document aspects relating to salary, standdown periods and level of reimbursement.
Do staff have income protection?
It is prudent that all doctors within a practice carry their own income protection insurance, but have you stipulated this within your business’s employment policies?
Do you understand the impact of dividend income?
In the event of disablement, ongoing dividend income may offset the benefit that a doctor will gain from their private insurance. Be sure to understand what your personal position would be in this situation. You may be paying for a benefit you would not be entitled to.
♦ This is where MFAS steps in
These pitfalls remind us that insurance cover to protect the human capital within your practice can be tricky. Too much and you are wasting money paying higher premiums for something you don’t need; too little and you could find yourself out of pocket if something goes wrong. That is why it pays to give some serious thought to your Practice Insurance and all other insurance needs and to ensuring your insurance cover is right for you and your business.
That is where MFAS can help. We will ensure you have a thorough understanding of the insurance you have in place and how it will protect you, your family and your practice in different eventualities.
Protecting your business is more than just insurance:
- We can recommend the correct ownership structure for your sized business.
- We know the proper questions to ask to ensure your business has the correct levels and types of insurance in place.
- Because we are independent, we can work with your business to explore options with all of New Zealand’s leading insurers ensuring an outcome that is of the greatest benefit to your business.
- We can design and help you to implement a group plan that ensures every key player in your business has their income protected.
- Subject to certain criteria, we can cover all pre-existing conditions. This will assist you in hiring and retaining quality people, raising staff morale, and providing certainty to your workforce in the event of their earning capacity being compromised.
Your MFAS Financial Advisor will ensure all aspects of your business’s insurance are in order. For a free insurance review, give us a call – 0800 379 325 – and we will confidentially discuss your insurance needs to ensure the best cover at the best price.