Why CALI’s Simple Advice Push Matters for Business Owners

The latest industry commentary points to a persistent advice gap. CALI says only about one in three Australians understands the life insurance products and benefits they currently hold. It also says life insurers supported about 54,000 claims and paid almost $6 billion through group superannuation policies over the past 12 months. Those figures show that insurance inside super can be a valuable safety net, but they also highlight why business owners should not assume it is automatically enough.

Super-based life and disability cover is generally designed around an individual member’s personal circumstances. A company, partnership or family business may need a different structure altogether. If a founder dies, becomes totally and permanently disabled, or can no longer work after serious illness, the business may need funds to repay loans, replace lost revenue, recruit leadership, buy out an estate or activate a succession agreement. These are not always problems that a standard member benefit will solve cleanly.

The Federal Government’s Delivering Better Financial Outcomes reforms are expected to help close part of the advice gap by allowing life insurers to provide simple advice about their own products when customers seek help. That may improve understanding, particularly for employees who are unsure what they have inside super. However, simple product guidance should not be confused with a complete business protection strategy.

For SMEs, the practical takeaway is to review the full protection picture: personal cover, superannuation cover, business life insurance, key person insurance, buy-sell funding and debt protection. The review should consider ownership structure, loan guarantees, revenue reliance on specific people, tax treatment, premium affordability and how claims proceeds would flow if something happened.

This is also where specialist advice can add value. A business owner may need to coordinate lawyers, accountants and insurance professionals so that policies match agreements and the intended recipient receives the funds at the right time. CALI’s call for simpler advice is welcome, but for business owners, simplicity should be the starting point, not the finish line.