Eligible and Ineligible Expenses
Examples of eligible expenses:
- Accounting and audit fees
- Advertising costs which are contracted (eg. Yellow Pages)
- Bank fees and charges
- cleaning costs (office)
- Electricity, gas, water and sewage
- Equipment hire
- Insurance (except BEX and Income Protection policies)
- Lease on plant, equipment and vehicles
- Motor vehicles costs (watch out for fuel as this may reduce or cease once the insured becomes disabled)
- Payroll tax
- Rates on property
- Rent (if paid to a related entity we will insure what we consider to be the arms-length proportion)
- Repairs and maintenance (reasonable annualised level excluding small asset purchases)
- Salaries, superannuation and related costs of employees not involved in the generation of income
- Subscriptions and membership fees
- Telephone (ongoing proportion)
- Net cost of a locum less any business earnings generated by the locum (a locum is a person from outside the life insured’s business who is a direct replacement for the life insured in their business).
Examples of ineligible expenses:
- Any amounts paid to the insured or their spouse (salary, super, drawings, etc.) Note that if the spouse works in the business, the insurer will only allow reimbursement of what they regard to be a reasonable remuneration in the light of the spouse’ss duties and number of hours worked per week
- Payments to related entities/businesses also owned or controlled by the insured/ insured’s spouse/ insured are family. Examples include service, management or administration fees or any discretionary transfers of profit.
- Personal or private expenses of the insured/ insured’ss spouse/ insured’ss family, paid by the business. This includes personal usage proportion of motor vehicle expenses, telephones and mobiles, courses, etc.
- Employment cost (salary, super plus other) of employees involved in generating income. The exception to this is the appointment of a new locum(s) in the case of doctors. The insurer will reimburse the employment cost of such locum(s) , however will also reduce the total expenses payable by any income generated by such locum(s)
- Cost of goods sold (this is already included in the gross profit figure that is offset from the expenses)
- Depreciation and the purchase cost of any assets/tools or other capital items
- Principal element of any mortgage/ loan repayments (only interest is regarded as an expense)
- Premiums payable on this business expense policy.