Income Protection Insurance for Tradies
Is it just another expense a tradie has to worry about, or do you really need it? – Tradies And Income Protection Insurance?
There are many important types of insurance that you must have as a tradesman: Public liability insurance, vehicle and tools insurance, business insurance and much more.
You may not know that income protection insurance is compulsory for many tradespeople when working on certain construction sites!
Income protection insurance – What is it?
Have you ever had a close call at work when you have narrowly avoided an injury? Have you ever thought about what would happen to your business and your family if you did get injured and had to take time off work?
Or if you have children and your partner was injured or diagnosed with an illness. Would you take time off from work to help care for your partner and look after the kids?
You may also need to seek advice and understand that there are different insurances that you can have, and they can be used as a combined insurance strategy. For example, Income Protection covers a loss in salary, Crisis Recovery and Crisis Extension are for specific illnesses, and TPD is for a total and permanent disablement.
The other thing to consider is if these Personal Insurances should be covered in your Superannuation policy or should you seek additional insurances outside of your super. Insurance needs to be recommended by a suitable person, and it must be what relates to you. Please do not ask your friends and family about what they have in place. Their situation is different from yours.
You may not have considered the other scenario is if you have a business partner?
Have you discussed Income protection, life insurance or even the topic we all tiptoe around, and that is life insurance?
Check out the below video about what you need to consider if you have a business partner!
Thanks to Amanda who is part of our Trade and Builders Business Coaching advisors.
Her business is here
How many weeks could you survive without your income?
As a business owner or working as a subcontractor, you are probably not entitled to sick leave or even workers compensation. However, with income protection insurance, you will have some peace of mind until you can return to work or reskill in another profession.
New changes to Income Protection Insurance do now have guidelines on how long the insurance payments and made for and if you are required to find alternative work if you cannot return to your industry.
I have work accident insurance. Is that not enough?
If you are an employee, workplace injuries are covered by workers’ compensation insurance. However, payouts are limited to a limited number of years and may not cover a large portion of your income. And what happens if you get injured outside of work?
You can easily get hurt playing footy with friends on the weekend or even hurt yourself in your own home. And what if you fall seriously ill and cannot work for a long time?
Income protection insurance covers injuries and serious illness both on and off the job.
Is income protection insurance expensive?
As with any other insurance, the price depends on the level of cover, your age, your smoking status and the nature of your profession. Because a skilled trade occupation has a high rate of work-related injuries, you should expect higher premiums than other occupations.
You may also find that it can be challenging to find an insurance policy for you if you are in a high-risk trade or have increased risk hobbies. (e.g. horse riding, scuba diving or rally car racing)
In 2021 many of the insurance income protection insurances and coverage changed. What was possible is no longer available for new policies. The prices have also gone up.
To get the right advice for you and your family – You should seek professional advice. The professionals who can give you the correct advice for income protection insurance or other insurances like Total And Permanent Disability Cover are financial planners or insurance agents specialising in risk management.
Just like how you are a master at your trade – the same goes for insurance.
You would not use the same broker who set up your car or home insurance. Instead, you would seek the advice of a broker or financial planner who will be able to assess everything in your current work, current family situation and what your projected lifestyle and income would be.
Insurance broker for risk management
Instead of finding a policy yourself and navigating the confusing legalities, you should contact a specialist business insurance broker. They know the industry well and will find you the right cover at the right price.
Premiums for income protection insurance are also 100% tax-deductible, which is an advantage at tax time.
Personal accident and health insurance are cheaper. Isn’t it the same as income protection insurance?
Accident and health insurance is similar to income protection insurance in that it provides financial support if you become unable to work due to an injury or serious illness. However, the insurance can be cancelled, or the renewal refused at any time at the insurer’s discretion if your health, job or lifestyle changes.
Renewal of income protection insurance cannot be refused by the insurer as long as you pay your premiums. However, the benefit period for accident and health insurance is limited to 2 to 5 years, and there are more exclusions, for example, for injuries caused by sports activities such as football or high-risk activities.
What else should I look for when getting insurance advice?
Be wary of policies that do not require a health assessment when you take out the policy, as the insurance company may check your health when you apply and may refuse to pay if you have pre-existing conditions. Therefore, it is best to look for a policy with full medical underwriting to check whether pre-existing conditions are included (or excluded) before you take out the policy.
If you don’t think you can wait the minimum waiting period before payments start, look for a policy that includes accident cover. If you have an accident, you can still receive payments despite your waiting period.
What happens next?
Income protection insurance is essential for any tradesperson or a self-employed business owner. However, if you’re not sure you can afford income protection insurance or any other essential commercial insurance, your business may need professional help to improve your business strategy.
A trades business coach specialising in helping tradies and builders grow and scale their trades business will help you plan for cash flow issues, business costs and other financial obstacles to ensure you can afford.
Having insurance policies that further look after your family’s future will give you peace of mind that you and your family are protected in an accident or serious illness.
At BusinessSight, our trades and builder programe, combines business coaching and mentoring to achieve the best results.
Contact us through our contact page to book a call with us.