Even more alarmingly, if things go wrong many have no contingency plans. Small business owners will usually identify their biggest assets as themselves. This is especially true if they are the full controlling owner of their company or are a sole trader. But even those in a business partnership could find their business suffers significantly without one of the owners at the helm.

That’s why adequate insurance that protects a small business owner against illness, injury or even death, should be part of every business’ contingency plan. And yet, in a wide-reaching survey of Australian small businesses, we found that almost half of owners had no form of life insurance at all – including Income Protection, Total and Permanent Disability (TPD) or Critical Illness (also called Trauma or Cancer insurance).


To help understand the low level of life insurance in this group, we asked uninsured business owners if they had an alternative back up plan if they were unable to work. About 59% said planned to fall back on their savings or sell assets, while 35% said they would reduce their lifestyle and spending.

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Both these options, especially for the 30% of uninsured owners who had children, could potentially create financial stress for them and their families. For instance, business owners who need to sell assets quickly, if they are suddenly without an income, may not get the best price. Or for those who are unable to return to work quickly or not at all, simply reducing the standard of their lifestyle won’t be enough.

Owners also admitted that the impact of ill health or injury on their business could be devastating. Twenty-two per cent said that they would need to temporarily close or even sell their business. Most surprising of all, 16% said they hadn’t thought about it at all.

This indicates that we still have some work to do in explaining the benefits and value of lifestyle protection for this vulnerable group.


Our recent white paper contains more valuable insights into small business owners and their attitudes towards life insurance. To download the report, click here