Farmer Insurance
Farmer insurance has been available to Australian farmers and those working in the agriculture industry for a number of years. Life insurance companies are offering greater financial protection in what is often seen as a cyclical profit producing industry with its own high's and low's. Income protection for farmers offers a safety net should farmers or those with farm jobs or agriculture jobs fall on tough times due to accident or illness.
Flexible income protection insurance policies for farmers
A select number of Australian insurers offer comprehensive and flexible income protection insurance policies for those working in the farming industry with farm jobs or agriculture jobs.
These policies allow farmers and those with farm jobs or agriculture jobs to use a proportion of their gross farm turnover or their net income, whichever is more appropriate for their circumstances, as a basis for calculating their benefit.
Several waiting periods, flexible benefits and stepped or level premiums are available. Indemnity value policies, and agreed value policies are available (however agreed value policies are generally only available to farmers who can prove consistent positive net income for several years).
Making allowances for irregular farming income
Due to the nature of their business, many farmers have large business expenses which mean they may not be able to show consistent net income.
To alleviate this hurdle, some insurers calculate benefits on the basis of 30% of the farm's gross turnover (to a maximum of $3,500 per month).
Farmers income protection insurance example
Trevor owns and operates a large dairy farm in Northern Victoria. He works full-time on the property and employs Sarah as a farm hand. Together they've run a successful business for the past three years, despite the hardship of the drought.
Income protection monthly benefit calculation
Because their current standard of living is dependent on both of them receiving a regular income from their work, after consulting with their financial adviser, both Trevor and Sarah have taken out income protection insurance policies.
In the last financial year, the farm turned over around $350,000. Although Trevor's income after expenses was negligible for the period, he was still eligible for cover. Trevor was able to apply for income protection insurance of $3,500 per month on an indemnity basis. Further, Trevor chose a waiting period of 30 days and a benefit period to age 65.
This plan gave Trevor and his family a level of security, knowing their livelihood would not be threatened if he suffered an unexpected illness or injury that prevented him from working.
Sarah, too, was able to take out an income protection insurance policy for around $2,600 per month. Her occupation classification meant that her policy was yearly renewable and on an annual basis and that she could obtain a plan with a waiting period of 30 days and a benefit period of two years.
Income protection insurance for farmers
For those working farm jobs or agriculture jobs in the farming or agricultural industry and would like to discuss your income protection insurance options, then contact an xLife adviser. We can compare a number of income protection quotes best suited to those in the farming industry, and help ensure that in the event of a claim, your benefit payment is maximised.
Source: AXA 2010
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April 2011
