Don't take the risk of going uninsured. Get an income protection policy that suits plumbers and cover yourself for the worst.
If you're a plumber, how would a serious injury affect your livelihood? Does your entire business rely on your own skills? Plumbers face more risks than most other occupations and are often self-employed, meaning a workplace injury can have dire consequences.
If you're a plumber, income protection insurance can offer you peace of mind and financial security. It works like this:
- If you are sick or injured and unable to work income protection insurance pays a monthly benefit.
- This benefit, usually around 75% of your income, can pay your business costs, medical bills and daily needs while you're out of work.
This page will break down the benefits of income protection, the risks plumbers face and help you shop for a suitable income protection policy.
Why are plumbers at risk?
While fixing the bathroom pipes seems fairly safe, plumbers face serious physical risks in their work and are over-represented in workplace fatality statistics. The construction industry employs a large number of plumbers and is the third most dangerous industry, according to fatality statistics from Safe Work Australia.
Specific risks plumbers face
Plumbing is a unique and specialised trade with some specific risks most workers are unlikely to face. These include:
- Being hit by a vehicle or object. The most common cause of worker death in Australia is being hit by a vehicle or moving object. If you are working on or around roads for sewer or drain construction, or on large construction sites, be aware of the risks. Being hit by a vehicle could lead to a serious injury and require a long recovery time.
- Repetitive strain injuries from manual labour. Many of you plumbing jobs may require the repeated use of power tools, which can cause injuries. You might also injure yourself doing heavy manual tasks like digging and lifting. Serious injuries can require you to take on a less active role, which might mean a couple of years without income.
- Trench collapse. If you are a plumber who lays pipes or installs drainage channels, you could be trapped by a collapsing trench.
- Infectious disease. You may be exposed to infectious diseases while repairing the sewers of residential plumbing systems. For example, exposure to Hepatitis B can lead to complications that require time off for recovery.
What types of insurance are available for plumbers?
Income protection insurance is one of the more obvious policies plumbers should consider. And within this category there are several types of income protection plans to look at:
- Accident only cover. These policies will only cover you for injuries and not illnesses. It’s the cheapest form of income protection insurance.
- Basic income protection. Basic income protection will cover up to 75% of your income if you can’t work because of an accident or illness. You don’t need to be injured or sick from a work-related event to claim on an income protection policies.
- Premium income protection. Premium income protection policies cover your income in the same way as a basic policy. They also have a number of additional benefits that you can claim, such as a lump sum death benefit, rehabilitation benefit and an expenses benefit.
Besides income protection insurance plumbers may find other forms of cover suit their needs well. Here are some common policy types:
- Life insurance. A life insurance policy pays a benefit to your family if you die or are declared terminally ill. If you are the sole income earner in your family, then a death benefit should be considered.
- Disability Insurance. Similar to life insurance, disability insurance pays a lump sum if you become permanently disabled and unable to work. It is important to check the policy wording as some insurers will only pay a benefit if you are unable to do any type of work, not just your normal occupation.
- Total and Permanent Disability Insurance. Rather than paying ongoing monthly benefits, TPD insurance pays out a single lump sum if you are injured or disabled and your condition meets the insurer's definition of disability.
- Trauma Insurance. Similar to TPD insurance, a trauma policy pays out a lump sum if you are diagnosed with a specific condition defined in your policy.
- Key person insurance. While not necessarily a form of income insurance, key person insurance helps a business financially after losing an integral member of the business. This could be useful if you are a self-employed plumber offering a highly-specialised service.
What types of plumbers need income protection insurance?
- Roofing plumbers, classified as “special risk”
- Sprinkler Fitters
- Residential plumbing
- Gas fitter
How do insurers classify plumbers?
Plumbers will typically be classified as “blue collar”, regardless of the sector they work in or the type of plumbing they do. The “blue collar” rating is for certified tradespeople doing skilled manual work. However, in some instances, plumbers might be considered “special risk” if they are in a high-risk industry and in a role that is not purely trades based, such as working offshore or underground.
Unlicensed plumbers or those doing unskilled manual labour will be classified as “heavy blue collar”. Plumbers that supervisor others may be classified as “light blue collar” if they spend most of their time supervising or doing light administrative tasks.
How much should a plumber pay for income protection cover?
The price you pay for income protection will vary based on your age and income, among other things. Here are some example quotes for a plumber taken from finder's comparison engine:
*These quotes are examples only and are based on a 35-year-old, male plumber living in NSW who doesn't smoke. Your actual quotes may differ from those shown. These quotes are accurate as of June 2017.
How can I find the right income protection insurance for plumbers?
Here are some of the important things to consider when taking out income protection insurance:
- Agreed value vs indemnity value cover. Agreed value policies pay a fixed benefit, which is agreed at the start of the policy. Regardless of income changes, your benefit amount will remain the same. Indemnity value cover calculates your benefit based on your income over the previous twelve months. This means your benefit will go up if your pay increases. However, it is also affected by periods of unpaid leave or part-time work.
- Benefit Periods. You can usually select a benefit period that suits you when purchasing income protection insurance. The period can range from six months to five years. The shorter the benefit period, the lower the premium will be.
- Waiting period. The waiting period is the length of time you must be without income before a benefit is paid. You will be able to choose a waiting period that suits you. Insurers generally offer waiting periods of between 30 and 90 days.
- Stepped vs. Level premiums. Stepped premiums increase each year you hold your policy. Level premiums are set higher to begin with, but stay the same over the entire time you keep the policy. Level premiums will be more than stepped premiums, to begin with, but will cheaper in the long run.
- Non-cancellation guarantee. Some insurers guarantee to renew your policy as long as you continue to pay your premium each year. This is a good way of ensuring you will never be left without insurance if your circumstances change in the future.
If you're a plumber who runs your own business you'll probably find your income fluctuates from month to month. For this reason an income protection policy with agreed value cover is a good idea. With an agreed value policy you can lock in a monthly benefit that matches your average income even if you're injured at a time when your income is lower than usual.
Here are some specific considerations for plumbers:
- Due to the manual nature of your work, you might need longer periods of recovery if you are injured. It’s worth considering a policy with the option to have an extended benefit period.
- Young plumbers or apprentices might want to choose a stepped premium policy to minimise the initially cost of insurance.
- Self-employed plumbers or those with fluctuating incomes may want to consider a fixed cost benefit to ensure they receive adequate income should they ever need to claim.
- New employees or self-employed plumbers should consider selecting short waiting periods. Those who have accrued large amounts of sick leave could reduce their premium by choosing a longer waiting period.
How do I compare income protection plans for plumbers?
Comparing income protection plans is the best way to ensure that you find a plan that is both affordable and offers the level of protection you want.
When you compare income protection for plumbers make sure you look at a number of key details to boost your chances of finding the right plan at the right price. Some of the things you need to look at when you compare plans include:
- How much will the plan cost? It is important to compare the cost of income protection cover from a number of providers, as you need to ensure you are able to comfortably afford the premiums to keep the plan active. The cost can vary based on a number of factors, so rather than compromising on the level and quality of the cover you take in order to cut costs simply compare different plans and providers.
- What level of coverage are you able to get? The amount of income you would need to have coming in is based on what your financial commitments are. However, the level of income that you can cover can vary between different plans and providers. Make sure you know what level of coverage you can get from the different providers you are considering – and make sure that this will be adequate for your needs.
- The period of cover available. Depending on which provider you go through, you can choose from a number of benefit periods over which you would receive the benefit in the event of a claim. Check the options available and then decide how long you want to protect your income for. Bear in mind that this will impact upon the price, with longer protection periods resulting in higher premiums.
- What other benefits will you get? You may find that some income protection plans offer some other benefits, either as part of the plan or as optional extras. Compare the different plans and see whether any of them offer any extras that you could benefit from, as you could get even greater value for money on your cover.