Income Protection for Tradesmen

Tradesmen

Looking for affordable but quality cover to protect your income as a tradie? Compare your options from Australian brands.

If you're a tradesman, then it's crucial to consider income protection for various reasons. For instance:

  • Working as a tradesman is often a hazardous occupation. From occupation-specific risks, for example electric shock for electricians, through to the more general risks associated with working on building and construction sites,
  • Many tradespeople are self-employed or run a business. If you’re struck down by illness or injury and unable to man the tools, you won’t be able to draw an income and you and your business could quickly head towards financial difficulty. Furthermore, you won't be entitled to sick leave if you don't have an employer.

Rate of injury claims fort tradesmen

This is borne out in the statistics, with figures from Safe Work Australia revealing that trades workers and technicians in Australia had a serious claims incidence rate of 15.4 per 1,000 employees in 2012-13.

Source: Australian Workers’ Compensation Statistics, 2012–13, Safe Work Australia.

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Compare income protection with these direct brands

Product details Maximum cover Maximum Entry Age Cooling-off
(days)
Virgin Income Protection
Virgin Income Protection
Cover up to 85% of your income up to $10,000 per month if you can't work due to sickness or injury. Cover for over 1,000 jobs and full-time, part-time and self-employed. $10,000 60 30 Get quoteMore info
ANZ Income Protection
ANZ Income Protection
Receive up to 75% of you income (up to $10,000 per month) of your income if you're unable to work due to serious illness or injury. $10,000 59 21 Get quoteMore info
Income Protection
Income Protection
Cover up to 75% of your monthly income if you can’t work due to illness or injury, up to a maximum of $10,000 a month. Take out cover today and you could get a bonus $100 Gift Card. $10,000 59 30 Get quoteMore info
NobleOak Income Protection
NobleOak Income Protection
Cover up to 75% (to a maximum of $25,000) of your monthly income with NobleOak Income Protection. Benefit period can be tailored to suit your needs. $25,000 59 30 Get quoteMore info

Will I pay more for income protection as a tradie?

Depending on the nature of your trade, an insurance underwriter may consider applying an extra loading if they deem that you present an extra level of risk. This is because the trade requires workers to be quite active and dependent on the wellbeing of their bodies. Where an office worker may be able to continue to work in some capacity following an injury, this may not necessarily be the case for some trades workers.

Being tradesmen is only one factor that insurers consider. Other factors include:

Factors that influence your premium include:

  • Gender. Women will generally pay more for income protection as they are more prone to take time off work as a result of injuries and illness.
  • Age. The older you are the more you will pay for income protection as you're considered more at risk of injuries and illness.
  • The specific trade type you work as. This will vary with each policy holder but in general, higher risks trades will attract higher premium.
  • If you're a smoker. Smokers will be subject to a higher premium.
  • Your income levels. The higher your regular income is the more it will cost to insure it.

Are there tax benefits when it comes to income protection?

Will I be charged GST on my income protection plan?

There is no GST payable for income protection.

Are my income protection premiums tax deductible?

In most instances, policyholders can claim the cost of income protection premiums at tax time. This is because those premium payments are deemed to be seen in the same way as their regular income.

Should I still consider income protection if I have workcover?

While workers compensation insurance may provide some cover to workers for injuries that are sustained at work, it will not provide cover for illness or accidents that have occurred offsite. If you were to break your ankle playing soccer on the weekend with friends and be forced to take time off work as a result, you would not be eligible to receive any payment from WorkCover.

Income protection and workers compensation compared

income ProtectionWorkers Compensation
Provides an ongoing benefit for both sickness and accident that has occurred at work or outside of the workplace.Pays a lump sum for injuries sustained at work or while travelling to work.
Income protection benefits will pay up to 75% of your income. Some will allow for the policyholder to receive more but this must be contributed to their superannuation fund.Workers compensation benefit varies from state to state.
Benefit payments may only continue until age of 65.Depending on the state the worker is in, benefit payment generally only last from 13 weeks to 9 years.
There is no cap on benefit payments for Income Protection. They may continue until the end of the policyholders benefit period.Benefit payments are usually capped at a maximum limit for the lump sum benefit payment.

While workers compensation will provide some much needed support for accidents that have occurred at work, this type of cover does simply not offer the same comprehensive, tailored protection that is found with income cover. The reality is that we are often at just as much risk of experiencing accidental injury and illness outside of the workplace, especially if you enjoy partaking in sport and other pastimes where there is some risk of injury occurring.

Tradesmen: Follow these steps when applying for income protection

There is a quick 4 step process to assist Tradesmen looking to take out income protection cover.

If you're self employed, your steps to get cover are generally the same as if you work for an employer. However, there are some additional considerations to think about. Firstly, because you cannot provide proof of employment you will typically need to show proof of income instead. This can be a problem if you're still in your first year of operation.

Here, you might not be able to supply the needed proof of income. The first way around this is to wait a year before getting cover. The second is to find an insurer that will sell a policy without proof of income. However, this might cause issues if you need to make a claim.

  • Proof of income may be required in the event of a claim. The subsequent payout may also be based on this amount. If it's determined by your average income over the previous 12 months it might end up being too low.
  • It may be possible to find an insurer that is willing to offer a flat monthly sum of income protection insurance per month, without proof of income at the time of application. However, this type of cover might be very hard to find.

If you want to have cover in your first year of operation it might be a good idea to consult an insurance broker. They can liaise with providers on your behalf and may be able to offer more customised policies than might otherwise be available. For example, if you're a self employed electrician in your first year of operation and your bank offers income protection insurance, you might consult an affiliated insurance broker. The broker might then be able to negotiate a policy with the bank directly, and get you cover with only 2 months proof of income.

  1. Find out what benefits you already stand to receive from your employer. If you are not a self-employed tradesman, you may already be eligible to receive a number of benefits from your employer in the event of an accident. This may impact your decision on what benefits and options you wish to include on your policy.
  2. Gain an understanding of the different benefit options available. There may be different policy options and benefits available that are more suitable for your situation as a tradesman. Similarly, you may wish to consider policy options that provide additional support for your family in the event that you are forced to take time out of work.
  3. Make an Enquiry with an Insurance Consultant. An insurance consultant can let you know what insurance companies are more likely to offer affordable cover to tradies. Their knowledge of the market means they are able to locate affordable policy options that offer the right level of protection for your situation.
  4. Review Policy Options. Review the different policy options that are available. Consider the price and the conditions and exclusions for a benefit being received. Ensure you read through the product disclosure statement closely.

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Picture: Shutterstock

William Eve

Will is a personal finance writer for finder.com.au specialising in content on insurance. While he cannot give personal advice to clients, Will enjoys explaining the intricacies of different types of protective cover to help individuals and businesses find affordable cover that won't leave them underinsured.

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