by Jenha White
It has introduced New to Business Cover which replaces Key Person Benefit, and Business Continuation Cover replacing Business Overheads and Locum Cover.
AIA New Zealand director of national sales Andries Van Graan says the products are intended to reduce complexity.
"We're in a market that's going through a lot of changes with regulation coming in at the end of this year. The more complex the products, the more we will put advisers at risk."
He says AIA previously offered seven different products for Business Succession Planning, but it discontinued four products at the start of April with the introduction of New to Business Cover and Business Continuation Cover.
Bay Insurance Brokers director Simon Beaton says his first impressions of the Business Continuation Cover were favourable.
"I'll probably use it as my primary business product because it is so simple and well priced but the product's simplicity also reduces its flexibility. If I need more flexibility I'd look at using ING's Business Extra product."
The Business Continuation Cover is an agreed value benefit of up to $50,000 per month, for profitable and well-established businesses (more than four years old). It helps with business survival during the short term disablement of a key person.
The cover is paid monthly in advance, for up to one year, to supplement cash flow to alleviate the financial impact of the key person's absence.
Van Graan says the monthly benefit could be used to find and pay for a suitably qualified person to replace the disabled owner or key person, or to contribute to overhead costs.
A key person is defined as either a working shareholder or a non-shareholder employee with specific skills who generates revenue for the business by their own exertion. The business must have no more than five key people and no more than 15 employees.
The other new product, New to Business Cover, is an agreed value benefit for new businesses less than four years old.
It has a fixed monthly benefit of $2,000, $3,000, $4,000, $6,000 or $8,000 per month which provides a financial safety net that is deployed when an owner or key person is disabled.
Both the New to Business Cover and Business Continuation Cover have a choice of waiting periods of four, eight or 13 weeks and premiums waived while a benefit is being paid.
They also include a Leave without Pay Benefit and Recurrent Disability Benefit. There are no offsets against other insurance or ACC benefits.
Jenha is a TPL staff reporter. jenha@tarawera.co.nz
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