Income Protection Insurance
Income protection is a vital form of insurance for tradespeople.
Whilst we do not offer income protection directly, we do have a referral partner who specialises in income protection for tradies.
When you request a quote for income protection from Trade Risk, we will be referring you to this partner.
Please note that all ongoing service and support for income protection will be provided by our referral partner, and not by Trade Risk
This referral partner has been looking after Trade Risk clients for over five years, and over that time they have assisted many tradies with great quality cover and service.
What is Income Protection?
Income protection is a form of trade insurance which can replace up to 75% of your income whilst you cannot work.
Unlike a life insurance policy, it will pay an ongoing monthly benefit if are off the tools due to an injury or illness.
Why Do I Need Income Protection?
For many tradesmen income protection will be mandatory in order to enter the worksite. This is mainly the case for self-employed tradies and subcontractors, whilst employees will generally be covered by their employer’s work cover or sick leave.
Ultimately, if you can’t work you can’t earn money. And if you can’t earn money, who is going to pay the bills and keep food on the plate for your family? This is how income protection can really help a tradesman and his family.
Income protection is important for all workers, however it is especially important for tradesmen as this graph shows:
This graph released by Macquarie Life in June 2009 shows that manual and trade workers make up the overwhelming majority of claims
It’s also worth noting that most of the claims referred to in the graph are related to musculoskeletal injuries. Just because you don’t get sick doesn’t mean that you don’t need to be protected.
People who are self-employed, particularly in the manual trade professions, should definitely consider income protection cover.
Income Protection Options
There are a range of different options when it comes to income protection, and the options you choose can have a major impact on the cost of the cover as well as your ability to make a claim on the policy.
The main options have been detailed below:
The waiting period is the amount of time you must be unable to work for before your benefits will start. The typical waiting period for a tradesman is 30 days, which simply means you must be unable to work for 30 days before you will be eligible for any benefits.
A shorter waiting period will equate to a higher premium, whilst a longer waiting period will result it a reduced premium.
When looking at the waiting period you may also want to consider a popular option known as day 1 accident cover. Follow the link for more information.
This is the amount that you will receive each month once you go on claim. Generally the maximum you can cover yourself for is 75% of your pre-tax income, however you can cover yourself for less if you wish.
The cost of your income protection will be heavily impacted be the benefit amount that you choose, and a higher benefit amount will equal a higher insurance premium.
The benefit period relates to the length of time you will continue to receive benefits for once you are on claim.
Benefit period options for income protection are generally 2 years, 5 years or age 65. By choosing an age 65 benefit period you will continue to receive monthly benefits until you turn 65.
A longer benefit period will result in a higher premium, and a shorter benefit period will bring a lower premium.
Income Protection Cost
The cost of your income protection will depend heavily on the options you select for your cover.
As well as the options selected, your premium will also be impacted upon by your age, smoking status and occupation.
Your premium will generally increase as you get older, and will also be higher if you are a smoker. Higher risk trades will also generally attract higher premiums.
Whether you’re a self-employed tradesman, subcontractor or simply on wages, income protection insurance is virtually always 100% tax deductible.
The flip side is that any benefits paid from your policy must be declared as income on your tax return, and will therefore by subject to income tax. With that in mind you need to ensure that you benefit amount is sufficient to cover your living expenses as well as the tax bill.
Here at Trade Risk we are not qualified to provide you with taxation advice, so if you need any further information on the tax treatment of your insurance you should speak with your accountant.
Tradesman Income Protection
Income protection insurance is available for virtually all trades and associated occupations in Australia.
Whilst there are some tradesmen who will struggle to obtain the top level of cover, such as scaffolders and tradies on underground mine sites, most standard trades will have no problem in getting the same level of cover that would be available for any other white collar manager.
When taking out income protection for a tradie it is important to use a financial adviser or insurance broker who specialises in dealing with tradesmen.
A specialist adviser will know which providers and which policies will provide the necessary cover to suit your personal needs as well as your trade.
To have a chat about your needs or to get a quote, please contact us or complete our quick and easy online quote request.