The Tradies Guide to Income Protection Insurance

How can income protection help tradies? 

Have you ever considered how you’d cover your bills and expenses if you were to get hurt on a building site, workshop or weekend camping trip? Income protection is a special type of life insurance that covers you if you’re unable to work for an extended period due to illness or injury. 

According to the Australian Bureau of Statistics, in 2021–22, technicians and trades workers were the occupation group with the fourth-highest rate of work-related injuries, clocking in at 5.3%.¹Australian Bureau of Statistics – Work-related injuries Not to mention that, of the 288,800 males who experienced a work-related injury or illness in the same financial year, almost a quarter were technicians and trades workers. 

So, if you’re responsible for supporting your family and paying the bills, income protection insurance can relieve some of the financial pressure so you can focus on getting better. 

I have workers’ compensation. Is that enough? 

While worker’s compensation covers you for injuries due to your job, it won’t provide you with financial support if you can’t work due to illness or injury sustained while you’re not on the clock. That’s where income protection cover comes in.  

In addition to providing cover for injuries that occur as a direct result of your work, income protection also provides cover if you’re unable to work due to illness or injury, regardless of where or how the injury or illness occurred. 

Imagine if you suffered a serious injury playing sport and couldn’t work for a long time … could you and your family survive financially without some extra help?  

How does income protection work? 

With an income protection policy, you can receive a monthly benefit of up to 70% of your income if you’re not able to work for an extended period due to illness or injury.  

When you take out an income protection policy, you can usually choose from a range of different options. For example, you can choose the benefit period, as well as the length of the waiting period.  

The benefit period is the length of time you’ll receive monthly payments while you’re unable to work due to your illness or injury. In most income protection policies, you’ll find benefit periods of two or five years, or otherwise up to a specific age (such as 65). 

The waiting periods is the time you need to wait between the injury or illness and when the payments start. For most income protection policies, this varies from 14 days up to two years. 

Exclusions and loadings 

As a tradie, your income protection policy might be subject to exclusions or loadings if you’re deemed to have a high-risk job or an existing injury.  

For example, some insurers may exclude back injuries if the tradesperson noted that they’d previously suffered from this type of injury and sought out treatment. While it might be tempting to leave out this kind of information when taking out an income protection policy, it’s essential to be as up-front as possible so you don’t put your insurance cover at risk. 

If an insurer doesn’t ask about your medical history at all, it could mean that their policy has either narrower policy definitions or more exclusions. 

What’s the average cost of income protection for tradies? 

The average cost of income protection insurance for tradies often depends on your profession, along with a range of other factors, including your age, gender and smoking status. 

To give you a better idea of how much you can expect to pay for income protection cover as a tradie, we’ve pulled together a table that details the monthly cost across a range of our providers at iSelect. 

*Based on a 35-year-old non-smoking male and female electrician from Brisbane, Queensland. $5,833 monthly benefit (70% of their income) with an annual income of $100,000. Benefit period of two years and a waiting period of 90 days. Data retrieved August 2024. 

How do I choose income protection insurance for tradies? 

When it comes to choosing income protection insurance, it’s worth considering if and how your policy is underwritten. Underwriting is a process that insurers use to evaluate the risk of insuring someone. It then determines the terms and pricing of their insurance policy. 

As part of the application process, you’ll often have to answer a range of questions to assess your individual risk, including: 

• age
• occupation
• financial information
• family medical history and personal health
• lifestyle factors
• high-risk hobbies  

With fully medically underwritten cover, your insurer will assess you for any pre-existing medical conditions when you sign up for the policy instead of when you make a claim. That way, your cover is tailored to your individual circumstances. 

Some insurance providers offer income protection policies without underwriting. While this might make it easier to obtain income protection insurance, these policies could include broader exclusions and higher premiums than underwritten policies. 

Ultimately, different insurers tend to offer different definitions and benefits within their income protection cover, so it’s important to compare policies based on benefits, features and price to make sure you’re taking out a policy that suits your needs.  

Is income protection insurance tax deductible? 

In most cases, your income protection insurance premiums paid outside of your superannuation are tax deductible, which is a great win come tax time. That said, it’s always worth checking with your accountant to make sure you’re claiming your deductions correctly.  

We’ve partnered with the team at Lifebroker so that you can compare income protection insurance from a range of providers in Australia. Start comparing income protection quotes and find a suitable policy in minutes.