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The Financial Consequences of Genetic Testing
As a business owner, you need to be in great personal shape to be able to carry out your duties.
Your business, employees and family rely on you to grow the business and produce decent profits so you can continue to stay in business. However medical issues do arise which can cause temporary or permanent impairment of your ability to perform.
As medical science advances, it offers us opportunities to potentially head off threats to our future health. One small advance is genetic testing.
As humans, some of our medical issues are inherited from our parents and ancestors. Some of the medical conditions are more of a nuisance such as short-sightedness rather than a seriously debilitating condition such as cystic fibrosis. Some inherited conditions are clearly life-threatening and at this stage can’t be cured. Other conditions when detected early enough such as inherited breast cancer, can be anticipated and mastectomies performed to remove breasts before cancer develops.
Where there is a history of an inherited disease, and something can be done about it, people are being generically tested, and if they are carrying the unique gene(s), they then undertake the necessary medical treatment, where available, to fix a potential future health condition developing. Some people undertake the test to see whether they’ll pass medical problems onto children and if deemed likely, they won’t have any or they’d then have to seek donor eggs/sperm.
Many business owners rely on personal risk insurance (i.e. life, total and permanent disability, trauma and income protection cover) to protect themselves and their business if they can’t work. However, taking a generic test prior to taking out personal risk insurance could be diabolical. If a genetic condition is discovered and it’s serious enough then the business owner won’t be able to obtain any insurance cover. The life insurance companies will deem the genetic disease to be a pre-existing condition which they won’t protect against.
This discrimination against people who have serious genetic conditions is viewed as unfair. However, insurance laws allow insurance companies to price for this higher risk or in many cases refuse to cover this risk. Therefore, a lot of people who’d like to protect their business won’t be able to do so. The law works this way so as to allow insurance companies to avoid people who have known health issues insuring to cover against a certain eventuality. If everyone similarly affected took out insurance, insurance companies would go out of business as they wouldn’t be able to meet all the claims or their premiums will be so high, a large number of people couldn’t afford to be covered.
So if you are in this category or know of anyone who may be considering genetic testing, the best thing to do would be to put your safety net in place before undergoing this procedure. Protecting your business and family from the worst happening means seeking expert advice. If as a business owner your annual income from the business needs protecting, working out what needs to be covered is easy, it’s the annual income you draw. By the way, the government gives you a tax deduction for the cost of protecting your income.
If your business is worth $1 million if sold today and you want to cover this value should you be unable to work or passed away, the amount to be insured, again is easy to work out, it’s $1 million. However, two separate insurance policies would be needed one for life insurance the other one for total and permanent disability.
Many businesses carry debts, and these don’t disappear if the owner shuts the business due to ill health or passes away. So again, insurance to eliminate the debt can be taken out which means if the worst happened the financial consequences are minimised for the business, the owner and the family who rely on it.
Similar cover can be put in place for key people in a business. For example, in Victoria, a key employee of a business who makes cricket bats is covered, as there aren’t too many people with this skill in Australia at the moment. The cost to replace him or cover for him will be large and financially impact the business.
So once an owner has put in place their safety net then, by all means, carry out the genetic test. If the news isn’t good at least the safety net put in place won’t be affected. It just means what has been put in place won’t be able to be changed or levels of cover increased because the generic risk the test has uncovered won’t be accepted by a life insurance company going forward.
“The opinions expressed by Smallville Contributors are their own, not those of www.smallville.com.au"
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