How is the cost of accident and sickness insurance determined?

The cost of your accident and sickness insurance premium depends on several factors. These typically include your occupation and its inherent risks, your age, your annual income, your chosen waiting period before benefits commence, and the benefit period or the duration you wish to receive payments for.

Are accident and sickness insurance premiums tax deductible?

Generally, premiums paid for accident and sickness insurance that provides an income-related benefit are tax deductible in Australia. However, if the policy also includes a lump sum component for permanent disablement or other capital benefits, this may affect the tax deductibility of your premiums. It's always advisable to consult with a financial advisor or the Australian Taxation Office for specific tax advice.

Is the benefit received from accident and sickness insurance taxable?

If your accident and sickness insurance policy pays a regular income replacement benefit, this income is generally considered taxable and must be declared in your tax return. However, if the policy pays a lump sum benefit for total and permanent disablement or a similar capital payment, this is typically tax-free. For accurate information related to your specific situation it is best to seek advice from a tax professional.

What is the process for making a claim on my accident and sickness insurance?

To make a claim on your accident and sickness insurance you generally need to notify your insurer as soon as possible after the injury or illness occurs. You will then typically be required to complete a claim form providing details of the incident or diagnosis and submit supporting documentation. This usually includes medical reports, doctors certificates, and proof of income to verify your financial loss. Your insurer will assess your claim based on your policy terms and conditions.

How long does an accident and sickness insurance policy last?

Most accident and sickness insurance policies are structured with an annual term, meaning the cover is renewed each year. You will need to continue paying your premiums to keep the policy active. It is important to distinguish this from the benefit period which refers to the maximum length of time you can receive benefit payments after a successful claim, not the duration of the policy itself.

What is the difference between personal accident cover and sickness cover?

Personal accident cover provides financial protection if you are unable to work due to an injury caused by an unexpected external event or accident. This can include injuries such as broken bones, burns or sprains. Sickness cover on the other hand, provides benefits if you cannot work due to an illness or medical condition that is not the result of an accident. Many policies combine both personal accident and sickness cover to offer comprehensive protection.

Accident & sickness insurance for self-employed

Accident and sickness insurance can help self-employed individuals receive ongoing income if they're unable to work due to accident or sickness.
Coverage can often be obtained without medical exams, unlike more comprehensive options.
This insurance is crucial for self-employed workers who are not eligible for workers' compensation.

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.
Accountant	Standard occupation, eligible for cover.
Manager	Standard occupation, eligible for cover.
Doctor	Standard occupation, eligible for cover.
Truck Driver	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.

Frequently asked questions

Generally, premiums paid for accident and sickness insurance that provides an income-related benefit are tax deductible in Australia. However, if the policy also includes a lump sum component for permanent disablement or other capital benefits, this may affect the tax deductibility of your premiums. It's always advisable to consult with a financial advisor or the Australian Taxation Office for specific tax advice.
If your accident and sickness insurance policy pays a regular income replacement benefit, this income is generally considered taxable and must be declared in your tax return. However, if the policy pays a lump sum benefit for total and permanent disablement or a similar capital payment, this is typically tax-free. For accurate information related to your specific situation it is best to seek advice from a tax professional.
To make a claim on your accident and sickness insurance you generally need to notify your insurer as soon as possible after the injury or illness occurs. You will then typically be required to complete a claim form providing details of the incident or diagnosis and submit supporting documentation. This usually includes medical reports, doctors certificates, and proof of income to verify your financial loss. Your insurer will assess your claim based on your policy terms and conditions.
Most accident and sickness insurance policies are structured with an annual term, meaning the cover is renewed each year. You will need to continue paying your premiums to keep the policy active. It is important to distinguish this from the benefit period which refers to the maximum length of time you can receive benefit payments after a successful claim, not the duration of the policy itself.
Personal accident cover provides financial protection if you are unable to work due to an injury caused by an unexpected external event or accident. This can include injuries such as broken bones, burns or sprains. Sickness cover on the other hand, provides benefits if you cannot work due to an illness or medical condition that is not the result of an accident. Many policies combine both personal accident and sickness cover to offer comprehensive protection.

Finder writers are subject matter experts and use primary sources, in-depth research and interviews with other experts to ensure you're getting accurate, up-to-date information. Articles are fact checked in line with our editorial guidelines.
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James Martin

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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, Insurance News, 7NEWS and The Guardian. An experienced journalist, James' work has featured in publications including The Irish Times, Companies100 and In Business. 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). See full bio

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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.

Key takeaways

How does accident and sickness insurance work if I'm self-employed?

How do self employeed contractors qualify for accident and illness insurance?

What is considered income for self-employed workers?