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Accident and sickness insurance for the self-employed
An accident and sickness insurance policy is available if you're self-employed – it can offer you financial protection on an ongoing weekly basis if you can't work due to illness or injury.
How does accident and sickness insurance work if I'm self-employed?
As a self-employed worker, there is little support for you to fall back on if you are seriously injured or become sick. Personal accident and sickness insurance offers protection to ensure you still receive an ongoing income.
It can provide income replacement that's paid each week. Or, at times, a lump sum. Cover can include accidental death, injury or disability.
There are different ways to get cover. You can tailor your policy to cover both personal accident and sickness, or just accidents only
No medical exams. Coverage can usually be put in place without having to undertake any medical or blood tests.
Below is an example of how insurers may assess your application for accident and illness insurance.
Occupation
How it's interpreted by an insurer
Carpenter
You can get cover but your premium may be increased. Certain types of carpenters roles will attract a greater increase in premiums e.g. carpet layers.
You can get cover but your premium will most likely be increased. Certain types of truck drivers could be uninsurable e.g. Long distance truck drivers.
Plumber
You can get cover but your premium may be increased. Certain types of plumbing jobs will attract a greater increase in premiums e.g. if you work on a roof.
Project manager
You can get cover but your premium may be increased for certain industries e.g. construction.
Engineer
You can get cover but your premium will most likely be increased. Certain types of engineers could be insurable e.g. Marine engineers.
Electrician
You can get cover but your premium may be increased.
Painter
You can get cover but your premium may be increased.
Sales
In most cases it's standard occupation, eligible for cover. There are some cases where your premiums would increase e.g. Lawnmower sales, deliverables.
How do self employeed contractors qualify for accident and illness insurance?
You can generally find cover provided you work at least 20 hours per week and have held the position for at least 12 months. For particularly tricky industries, it may be worth talking to an advisor or a broker to see what your options are.
What is considered income for self-employed workers?
Most insurance companies recognise the income for self-employed workers as the income generated by their business or practice through their own personal exertion or activities. This is the case for a self-employed worker, a working director or partner in a partnership. Income does not include:
Dividends
Interest
Rental Income
Commission
Revenue from sale of proceeds or assets
What features should self-employed workers look out for?
There are some key features that you want to look out for personal accident insurance, including:
A lump sum benefit amount if you become permanently disabled: If you are seriously injured and become permanently disabled, you are entitled to receive a lump sum amount. However, this will affect the tax treatment of your premiums.
Benefit period: Applicants must assess what a suitable benefit period is for their situation. Generally, you can apply for a benefit period of up to 52 weeks.
Waiting period: The amount of time that the injured policyholder must be unable to work in order to receive a benefit payment, generally after 30 day excess period.
Policy exclusions:
Benefit payment is usually only provided for injuries that have been caused directly by an accident.
Injuries should be externally visible and if necessary, will be verified by a medical practitioner.
Accident policies will generally not cover the policyholders for any illnesses, dental injuries and injuries that have been caused by self-infliction or attempted suicide.
The injury will usually have to be within 60 days from the date the policyholder stopped work.
Why you can trust Finder's life insurance experts
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Frequently asked questions
Both income protection and TPD cover are considered more comprehensive forms of cover than sickness and accident insurance. That being said, they are more expensive and the application process can be more time-consuming. It's ultimately up to you to decide on the best type of insurance for your needs.
No. For one, private health cover can cover some pre-existing conditions following any waiting period has been served. With sickness and accident insurance, cover often excludes all pre-existing conditions. Health insurance offers cover for a range of events such as hospital expenses, out-of-hospital care and prescriptions that aren't part of the pharmaceutical benefits scheme (PBS).
Personal accident insurance can be a good option for workers that have struggled to find a suitable insurance option in the past as a result of a pre-existing medical condition or the nature of their job. Compared to income protection, there is generally no medical underwriting required, in part, this is because pre-existing illnesses are not relevant to accidents.
When you're self-employed, you are not eligible for workers' compensation. Furthermore, many injuries and accidents occur outside of work and, with no appropriate cover in place, you are leaving yourself and your business at risk financially.
James Martin was the insurance editor at Finder. He has written on a range of insurance and finance topics for over 7 years. James often shares his insurance expertise as a media spokesperson and has appeared on Prime 7 News, WIN News, Insurance News, 7NEWS and The Guardian. He holds a Tier 1 General Insurance (General Advice) certification and a Tier 1 Generic Knowledge certification, both of which meet the requirements of ASIC Regulatory Guide 146 (RG146).
If you play sports or lead an active life then consider personal accident insurance. You can compare cover from Australian insurers here too.
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