At FMG we’ve been insuring farmers for over 100 years, and we find farmers tend to insure their physical assets first before thinking about themselves.
We know that you are your greatest asset, and that on each farm the business goals, farm complexities and lifestyle are different. But across all dairy farms the importance of the ‘key person’ is the same.
Without you, the key person, the farm may not be able to continue producing as it once did. And because contract milkers/variable order sharemilkers can be contractually obligated to replace labour if you’re unable to work, insuring the key person is crucial.
While the topic of injuries, bereavements and “what if’s” can be tough to think about, we think it’s worth taking a few minutes to consider some key areas*.
You’re in business
When thinking about signing your first dairy farming agreement, think as though you’re becoming a business owner. You are now fully responsible for the farm’s milk production, which provides all the income for you and your family, and contributes to the income of the farm owner. It’s worth taking the time to think about how that income can be taken away if you have an accident, suffer an illness or if the worst were to happen – you die. How will these events impact you, your family, and the goals you want to achieve in your farming career?
Covering the Key Person
Key Person cover provides you with a monthly financial benefit to go towards costs associated with being unable to work, like replacement labour, so you can focus your attention on getting better without having to worry.
If the key person on your farm becomes disabled, you might need someone in the shed as soon as possible – the tanker will still turn up. And regardless of illness and injury, you still have to meet the terms of your farming agreement, including if you have to provide a certain number of employees to do the work. This only adds additional stress at an already stressful time, so having insurance cover in place will allow you to meet your ongoing obligations, as well as your own family’s living expenses and wellbeing.
It’s worth noting while ACC provides excellent support, it does have its limits so it’s important to think about the on-going costs and impacts of an injury or illness such as medical and rehabilitation costs.
Read here how our client James Turner benefited from Key Person cover when he injured his shoulder during calving.
It’s also worth considering what plans you have in place to get medical support quickly when you need it. During calving you don’t have spare time on your hands and, trying to meet scheduled appointments can be difficult. Having some control and flexibility by being able to access private healthcare providers is something many of our clients value.
You’re worth looking after
Farming is a job with a unique set of challenges, and those challenges don’t go away. So, developing habits that help you perform at your best are so important. Visit farmstrong.co.nz to learn tips to Live Well and Farm Well by Sam Whitelock, Farmstrong’s ambassador.
Covering you means covering your debt
Most sharemilkers will need to take on debt to expand their herd – with the increase in dairy payouts, now may be the time farmers consider investing in their business. However any reduction in stock values may mean the debt levels don’t match the assets. In these situations, having sufficient Life cover in place if the sharemilker were to die, allows the partner and family to reduce the debt without relying on assets which may not have maintained their original value.
Farm owners can often have large debts and unfortunately debt repayment does not end when somebody dies. Life insurance provides peace of mind that if something does go wrong, you won’t be leaving anyone the responsibility of paying down debt on their own, in fact your cover may even be able to repay or reduce the debt significantly.
Planning for the future
There comes a time when the farm owner wishes to step back, and through succession planning the
next generation buys into the farm. The retiring farm owner may be called up to return to work if insurance cover isn’t in place.
Although it may be difficult to kick off the conversation, having a succession plan in place will reduce stress when the time comes. Consider getting a Will in place, appointing a power of attorney and, having Shareholders Agreement drawn up. It is important to understand what the farming agreement spells out – can the family continue to live on the farm if the main sharemilker or contract milker dies?
At FMG we think Life & Health cover is a good call – putting aside just 10 minutes to have an initial chat with us could be the best business decision you make. We’ll then come out to your place to better understand you and your business and take care of the paperwork.
If you’d like to speak to an FMG Life & Health Adviser give us a call on 0800 336 466.
Find out how Life & Health cover has supported our clients.
* This is a summary of our Life & Health advice for dairy farmers. FMG employs our own team of Life & Health advisers who are not paid commissions and work directly for FMG, and recommend advise and cover for our clients. Life & Health risk plans are underwritten and administered by Fidelity Life, AIA, AMP, and/or Southern Cross and are subject to their underwriting terms and conditions.
