In the world of agribusiness, coping with adversity is often part of the job. However, when a serious accident or illness strikes, both the farm and family security are at risk unless steps have been taken to protect income and assets.

“Because most farm businesses rely on family members to keep the productive unit running, if someone is out of action – even for a couple of months – it places enormous emotional stress on the family and business,” explains Chris Fry, National Manager, NAB Agribusiness Financial Planning.

He adds that most people have death and total and permanent disability (TPD) insurance as part of their superannuation – something that is “particularly important for farmers as they have the highest rate of occupational injury in the Australian workplace”. However, often overlooked are illnesses and accidents that can now be successfully treated with modern medicine but still require lengthy periods off work for recovery.

Income protection insurance can cover revenue and debt in this situation, so agribusiness owners can employ help, cover expenses and ensure the family has income. For those undergoing treatment, knowing their family is secure and the value of their business is being preserved relieves stress and gives them breathing space to concentrate on recovering their health, says Fry.

As well as income protection insurance, there are three other main types of personal insurance that agribusiness owners should consider for ongoing financial security:

• Critical illness insurance provides a lump sum if you suffer an illness specified in the policy.
• Total and permanent disability insurance provides a lump sum if you’re totally or permanently disabled due to illness or injury and are unable to work.
• Life insurance provides a lump sum payment to your family to secure their financial security in the event of your death, terminal illness or accidental injury.

Each of these insurance types is designed to help clear debts, cover expenses and assist your family to maintain their lifestyle.

In each instance, Fry says it’s important to seek specialist advice in choosing cover as “this is not a one-size-fits-all” issue. Many farmers, in particular, can be underinsured because of how they set their priorities. “Too many farmers think to insure their tractor before themselves, because it is not front of mind,” he says.

It’s also important to choose an appropriate level of cover, even if it means travelling into town for a medical examination.

And this isn’t exclusive for the older generation. Fry advises younger people not to be complacent, recalling the example of a farmer in his early thirties. “He had a lot of debt and was advised that the minimum level of life cover he had held since his early twenties would not be adequate to meet his current circumstances as a married man with three dependent children. He kept putting it off but finally got around to increasing his cover. Six months later, sadly, he was diagnosed with cancer and within two months he had passed away.”

The cover was paid out eight days later, enabling the farmer’s wife to pay off the debt so she could keep the farm operating and provide a farming future for the children. Fry says that if the family had stayed with the minimum level of life cover, she would’ve been forced to sell.

He believes spouses should be involved in the discussion about insurance and that it should take place on the farm site, where it’s easier to consider personal and financial factors, such as how the property could be run without the owner’s physical effort and the expenses that would need covering, like children’s education, travel and the cost of accessing specialist medical services.

It’s also essential to consider a spouse’s contribution when evaluating the needs of the family and the ongoing operation of the property. “Who’s going to do all the duties that often keep the family going, such as raising young children, helping around the property and farm paper work?” says Fry.

“This has to be a whole-of-family approach in farm businesses and it’s critical to get the right advice from a qualified personal insurance specialist. Farmers can then make an informed decision about the level of cover and cost they feel is appropriate to their individual situation.”