Income protection insurance for self-employed Australian tradies — why you need it, how much it costs, waiting periods, benefit periods and where to get covered.
📋 In This Article
- →What is Income Protection Insurance?
- →Why Self-Employed Tradies Especially Need It
- →What Does Income Protection Cost?
- →Waiting Periods — How to Choose
- →Benefit Periods — 2 Years vs To Age 65
- →Is Income Protection Tax Deductible?
- →Where to Get Income Protection for Tradies
- →Can I get income protection with a pre-existing condition?
- →What's the difference between income protection and total and permanent disability insurance?
- →Is income protection inside or outside super better?
- →More Insurance Guides
If you break your wrist tomorrow, how long could you survive without income? As a self-employed tradie, there's no sick leave, no employer, no safety net. Income protection insurance replaces 70–75% of your income if you can't work due to illness or injury. Here's everything you need to know.
📋 In This Article
What is Income Protection Insurance?
Income protection insurance pays you a monthly benefit — typically 70–75% of your pre-disability income — if you're unable to work due to illness or injury. It's not the same as workers compensation (which only covers work-related injuries) — it covers any illness or injury, whether it happens at work, at home or anywhere else.
Example: you're an electrician earning $120,000/year and you tear your ACL playing sport. You're off work for 4 months. Income protection pays you approximately $7,000/month (70% of $10,000/month) after your waiting period — so you can pay your mortgage and bills while you recover.
Why Self-Employed Tradies Especially Need It
Employees have paid sick leave as a safety net. Self-employed tradies have nothing. Every day you can't work is a day you don't earn. Consider:
- Physical trades have higher injury risk than office jobs — falls, cuts, strains, and repetitive stress injuries are common
- No employer sick pay — your income stops the day you can't work
- Business overhead continues — loan repayments, insurance, vehicle costs keep going whether you're working or not
- Recovery takes longer — physical jobs are harder to return to part-time than desk jobs
Reality check: The average income protection claim in Australia lasts 4–6 months. One extended injury or illness without cover can wipe out years of savings.
What Does Income Protection Cost?
Income protection premiums vary significantly based on your age, trade, income, waiting period and benefit period. Rough 2026 estimates for a 35-year-old male tradie insuring $80,000/year:
| Waiting Period | Benefit Period | Approx. Monthly Premium |
|---|---|---|
| 14 days | 2 years | $120–$180/month |
| 30 days | 2 years | $80–$130/month |
| 30 days | 5 years | $100–$160/month |
| 90 days | 2 years | $50–$90/month |
These are approximations — your actual premium depends on your specific trade, health history and the insurer. Female tradies often pay less. Older tradies pay more. Agreed value policies (where the benefit is fixed at the insured amount regardless of what you earn at claim time) are more expensive than indemnity policies but offer more certainty.
Waiting Periods — How to Choose
The waiting period is how long you wait after becoming disabled before payments start. Longer waiting period = lower premium.
14-day wait: Payments start almost immediately. Most expensive. Worth it if you have no savings buffer.
30-day wait: The sweet spot for most tradies. You cover the first month from savings, then the policy kicks in. Significantly cheaper than 14-day.
90-day wait: Cheapest option. Only suitable if you have 3+ months of living expenses in savings that you'd be comfortable using.
Benefit Periods — 2 Years vs To Age 65
The benefit period is how long payments continue while you're unable to work.
2-year benefit period: Covers the majority of claims (most people return to work within 2 years). Significantly cheaper than longer periods.
5-year benefit period: Good middle ground — covers serious injuries that require extended recovery.
To age 65: Most comprehensive — if you become permanently disabled and can never work in your trade again, you receive payments until retirement age. Most expensive, but provides the strongest protection.
For most tradies, a 30-day wait with a 2–5 year benefit period is the practical choice that balances protection and cost.
Is Income Protection Tax Deductible?
Yes — premiums for income protection insurance are generally tax deductible as a business expense for the portion that covers lost income. This makes the effective cost significantly lower than the premium: a $100/month premium at a 32.5% marginal rate effectively costs about $67.50/month after tax.
Note: there are specific rules around deductibility depending on how the policy is structured and whether it's inside or outside superannuation. Confirm with your accountant for your specific situation.
Where to Get Income Protection for Tradies
Options for getting income protection as a self-employed tradie:
- Through your super fund — many super funds offer group income protection at competitive rates. Check if AustralianSuper or your current fund offers it. Premiums come from your super balance.
- Direct from an insurer — TAL, AIA, MLC, OnePath and others offer retail income protection policies. You own the policy directly.
- Through a broker or financial adviser — they compare options from multiple insurers and help you structure the right policy for your situation.
- Through BizCover — BizCover offers some income protection options for self-employed tradies alongside public liability.
Can I get income protection with a pre-existing condition?
It depends on the condition. Most insurers will exclude the pre-existing condition from cover rather than refusing the policy entirely. This means you're covered for everything except claims related to that condition. Always disclose pre-existing conditions fully — failure to disclose can void a claim.
What's the difference between income protection and total and permanent disability insurance?
Income protection pays a monthly benefit while you're temporarily unable to work — you return to work and the payments stop. Total and permanent disability (TPD) insurance pays a lump sum if you become permanently and totally disabled and can never work again. Many tradies have both.
Is income protection inside or outside super better?
Both have pros and cons. Inside super: premiums come from your super balance (less cash flow impact), but the benefit is paid to the fund first, tax may apply, and you can only access it when you meet a condition of release. Outside super: more straightforward claims process, benefit paid directly to you, premiums paid from after-tax income but are tax deductible. Most advisers recommend outside super for better protection.
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