Self-employed income protection insurance

Can you get income protection when self-employed?

Yup, self-employed folks are typically still eligible for income protection insurance. Regardless of whether you're a business owner or contractor, most policies require a minimum of 20 hours of paid work per week. The amount of coverage available will vary based on the specific policy and your earnings. Income protection insurance can provide regular payments to replace a portion of your income in the event of illness or injury that prevents you from working.

How are premiums calculated for self-employed people?

The cost of your policy will depend on a few things like your age, what you do for a living, and the kind of coverage you want. Self-employed folks might have a bit more trouble figuring out their income since it can change a lot from year to year. Insurers usually want to see your tax returns to get a better idea.

And one more thing: your premiums might be tax-deductible. It's always good to check with your accountant to see if you can save a bit of cash there.

Compare income protection for self-employed people

Policy	Maximum Monthly Benefit	Maximum % of Income Covered	Maximum Benefit Period	Waiting Period Options	Self-employed Criteria	Apply
AAMI Income Protection	$10,000	75%	5 years	14, 28, 60 or 90 days	Excludes business expenses for self-employed applicants.	Get quote
Nobleoak Income Protection	$30,000	70%	Age 65	30, 60, 90 or 730 days	Self-employed income is calculated as an average of the monthly income generated by the business due to the individual's personal efforts (excluding incurred business expenses) over a 12 month period.
TAL Income Protection	$30,000	70%	Age 65	4, 8, 13 or 26 weeks	Must work at least 20 hours per week.	Get quote
InsuranceLine Income Protection	$10,000	75%	5 years	14, 28, 60 or 90 days	Income is calculated as your before-tax personal average income 12 months before your sickness/injury. Self-employed business expenses are taken out of the before-tax income to calculate your personal income.
Suncorp Income Protection	$10,000	75%	5 years	14, 28, 60 or 90 days	The insurer may ask you to provide verification of your occupation and breakdown of the duties required in running your business.	Get quote
RAC Disability Income Insurance	$30,000	Age 65	30 or 90 days	14, 28, 60 or 90 days	Must be aged 18-55 and work at least 20 hours per week.
HCF Income Assist Insurance Income Protection	$7,500	70%	12 months	30 days	You're eligible if you've been self-employed for at least 12 months.	Learn more
AIA Income Protection	$30,000	70%	age 70	14, 30, 60, 90 days, 1 Year or 2 Year	Must work at least 25 hours per week.	Learn more
Asteron Income Protection	$60,000	75%	To Age 70	14,30, 60, 90 days, 1 year, or 2 years.	Monthly income excludes income you'll continue to receive from your business even if you're unable to work, ongoing rental income, commission or royalties.	Learn more
BT Income Protection	$60,000	80%	5 years	14, 30, 90, 180, 360, or 720 day	Monthly self-employed income is calculated before the deduction of income tax.	Learn more
ClearView Income Protection	$30,000	75%	To Age 70	14, 30, 60, 90 or 180 days	Must work at least 20 hours per week.	Learn more
Commbank Income Protection by AIA Australia	$10,000	70%	Up to 2 years to the age of 70	30, 90 days	Must work at least 20 hours per week and spend no more than 20% of your working hours at your place of residence.	Learn more
Onepath Income Protection	$30,000	70%	To Age 65	30 days, 60 days, 90 days, or 2 Years	OnePath Business Expense Cover is available for self-employed working at least 30 hours per week.	Learn more
Zurich Ezicover Income Protection	$30,000	70%	5 years	30, 60, 90 days, 1 year or 2 years	Self-employed income also includes the individual's share of the business' net income based on his/her's ownership or role in the business. Doesn't include investment income.	Learn more
St. George Income Protection	$60,000	70%	To age 80	14, 30, 90, 180, 360, or 720 days	Monthly self-employed income is calculated before the deduction of income tax.	Learn more
Westpac Income Protection	$60,000	75%	To age 70	14, 30, 90, 180, 360, or 720 days	Monthly self-employed income is calculated before the deduction of income tax.	Learn more

What are the benefits of income protection for the self-employed?

If you're self employed, making sure your income is protected is a key consideration. When you are injured or sick and unable to work for an extended period, income protection insurance provides an ongoing monthly benefit to replace your regular income. Some of the advantages that this type of cover can offer to self-employed workers include:

• Replacement income. Without your income to rely on, you and your family can soon find yourself in financial trouble. Income protection insurance ensures that this doesn't occur.
• Workers' compensation. While self-employed workers don't qualify for workers' compensation cover, income protection provides similar cover but also includes protection for injuries and illnesses that are unrelated to work.
• Manage your obligations. Even though you are unable to work you will still have financial obligations from a personal and a business point of view. Income protection ensures that you can stay on top of these and simply focus on your recovery.
• Tax deductible. Premium payments for income protection cover are tax-deductible.
• Can be funded through your super. Though many people aren't aware of it, you can take out income protection cover through your superannuation fund and pay for your premiums using your super balance.

Insurance available to self employed workers

Do you need key person insurance?

All businesses have a key person without whom, the company would fall apart. If they were to die unexpectedly or become disabled and unable to work, the financial impact of this upon the business would be huge. Key person insurance , provides financial protection against the impact of the death, disability or incapacity of a key employee. If you're self employed, you're likely the key person, so getting insurance will provide you with :

• Tailored protection. Self-employed business owners can identify the person(s) that are critical to their business and take out a policy on those specific individuals.
• Ownership security. Key person insurance can help protect each party in a partnership when the other partner dies. This makes the transition of ownership much smoother.
• Finding a replacement. This cover can be used to cover the cost of finding, recruiting and training a new employee.
• Paying debts. Use your key person insurance benefit to settle any loans and outstanding debts.
• Covers business losses. Cover the cost of any lost sales, profit or goodwill as a result of the key person’s departure.

What is a buy-sell agreement and do I need it?

Buy-sell life insurance agreements offers a critical form of protection for business partnerships. Under such an agreement, the partners take out a life insurance policy on their co-owner but not on themselves. When one of the partners dies, his or her co-owners receive a lump sum life insurance benefit which they can then use to buy out the deceased’s share in the business from their surviving family members. The benefits of these agreements for self-employed people include:

• No financial loss for the company
• Smooth ownership transition in what could otherwise be a very difficult and potentially messy situation
• Ensures that the surviving owners have the funds they need to buy out the deceased’s share
• The family of the deceased partner gets a fair deal and suffers minimal financial impact from the death of their loved one
• Buy-sell agreements can also be taken out to cover trauma or total and permanent disablement
• Available in a variety of ownership structures (cross ownership, self ownership, corporate ownership etc) to suit a business’s needs and tax requirements

Is business expenses insurance something I should look at?

If you’re a business owner and you are injured or fall ill, it’s important that you are still able to pay your ongoing business expenses. Not to be mixed up with business insurance, business expenses insurance covers the fixed expenses of your business when injury or illness strike. It is owned by the company or partnership and the business owner is then listed as the life insured. It offers a benefit when you suffer a total or partial disablement, allowing you to cover costs like:

This type of cover is available for sole traders and partnerships and is payable to the person responsible for managing the business’s expenses.

How does Workcover for the self-employed work?

While WorkCover insurance is a mandatory requirement for many Australian employers, sole traders and partnerships are often not able to benefit from the cover provided by this form of insurance. As sole traders are not defined as workers, they usually have no legal requirement to take out cover unless they exceed wage thresholds or employ a trainee. There are a range of other insurances sole traders can benefit from including income protection.

How do I find the right cover?

Protect your business today and speak with an adviser

As this article demonstrates, there are a wealth of options available for people who are self-employed and seeking financial protection against a range of events. Of course, it’s important that you do your research and shop around to ensure that you end up with the right type and level of cover.

Frequently asked questions

• Do you need insurance as a sole trader in Australia?

  Every state and territory has different regulations around which types of insurance are compulsory for sole traders. For example, if you use a motor vehicle to operate in QLD, you'll need to ensure your comprehensive car insurance covers you for business use.

• Which insurance is best for the self employed?

  It depends. There are many types of insurance to suit different types of businesses but one place to start is often income protection. The best income protection will help replace your income if you're unable to work so you can meet any regular expenses, such as your ongoing bills, groceries and other family commitments.

• Do I need WorkCover as a sole trader in QLD?

  Sole traders who have employees must hold WorkCover Accident Insurance unless they qualify as a self-insurer. Self-insurance means that you will manage and take on the costs and risks of your own workers' compensation claims.

• Do sole traders need workers compensation insurance in NSW?

  A sole trader will likely need workers' compensation in NSW if they have an employee or engage contractors and also pay more than $7,500 in annual wages.