Most tradesmen and builders fully appreciate the importance of taking care of their tools and equipment, but many forget to take care of their best asset – themselves. Tradies can benefit from a number of different types of tradies insurance, but one of the most important is income protection. It is not only a sensible idea, but in many places, income insurance for tradies is mandatory.
What Exactly is Income Protection?
Income protection is a type of insurance that can cover a percentage of your regular income if you become sick or injured and are unable to work. Having income protection insurance means that you will still be able to pay your bills while you cannot work.
When you take out a new tradesman insurance policy, you will have to decide upon a few different options. These include things like waiting period, benefit period, and benefit amount.
This is how long you will have to wait between being unable to work until your income protection payments kicks in. Many tradies or builders choose a waiting period of 30 days, however other options ranging from 2 weeks to 2 years are available. In an ideal world, we would pick the shortest waiting period, however that typically means the highest premium payments.
This is how long you will receive income protection payments while you cannot work as a tradesman. For most tradies and builders, this option ranges from 2 to 5 years, or even until they reach 65 years of age. If budget allows, a policy that pays up to age 65 is recommended, however if budget is a problem, having a 2 or 5 year policy is better than having nothing.
In most cases, tradies can insure up to 75% of their income. However, remember that this amount is based on your net income after expenses and not your overall revenue. Most tradesmen choose to go with the full 75%, but you can insure for less if you need to.
Bundling your Cover
Income protection insurance can usually be bundled with your other insurance plans such as life insurance and TPD insurance, which can often result in less paperwork and lower premiums. Income protection insurance cannot be bundled with other types of business insurance such as tool insurance and public liability insurance, as they are considered a different type of insurance.
Do Tradies Really Need It?
While some tradies and builders may feel like they do not need tradesman income insurance protection, they will find that many building companies require you to have it before you can set foot on any worksite. Additionally, many tradies simply would not be able to survive without it.
Any tradesman or builder not covered by worker’s compensation or sick leave should have tradie income protection as it will be their only source of income if they find they cannot work. Even tradies who are on wages and do get paid sick leave can benefit from income protection, as sick leave typically only lasts for a few weeks.
The first step when looking for income protection insurance is to obtain some quotes. While any financial adviser can provide quotes, most tradies agree that it is best to find one who specialises in insurance for tradesmen.
Here at Tradebusters Academy we are committed to helping tradies succeed in business with numerous tips for tradies, events, and trusted service providers.
If you do need a good income protection specialist for your trade business, why not contact one of the listed income protection specialist for tradies on this website. And also check out some of the special offers they have for you.