When subbies are told that they need income protection insurance before they can enter certain work sites, often they will ask why it is necessary.

After all, income protection isn’t exactly cheap, so being forced to pay for something that you might not want isn’t too particularly appealing.

Unfortunately many of the companies they are subcontracting to can’t really answer the question properly, and just tell them that it’s a requirement.

So we’ve decided to put together a piece on why income protection is required by subcontractors in the building industry, and why it is so important.

What is Income Protection?

The first step is to explain exactly what income protection is.

We won’t go into too much detail since we already have a comprehensive guide on income protection that you can access by following the link, but here’s a quick explanation:

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Income protection can replace up to 75% of your income for a period of time whilst you are unable to work due to an injury or illness.

So basically if you fall ill or suffer an injury that keeps you off the tools, regardless of whether it happened at work or at play, your income won’t stop when your work stops.

There are waiting periods and benefit periods which apply to income protection, and you can learn more about these in our ‘choosing the right options‘ guide.

Why is it Mandatory for Subbies?

Tradies who subcontract are not eligible for sick leave or workers compensation in the majority of cases, so if you can’t work for a period of time, your income will stop straight away.

This is not a good situation for you as a subbie or for the company hiring your services, and that’s why they make income protection insurance mandatory in many cases.

Basically it is a way of forcing you to protect yourself. In some ways it is similar to how we are forced to save for our retirement through superannuation, even if we may not want to.

But it’s important to not look at this negatively. Income protection really is an important form of insurance to have for any tradesperson, regardless of whether you subcontract or are on wages.

How long could you keep paying the mortgage or rent, and supporting your family financially, if your income stopped suddenly due to an injury or illness?

The reality is that most Australians would only survive for a couple of months before they began suffering financial hardship, and that is definitely not something you want for your family.

Income protection can help you to avoid this hardship by replacing a big chunk of your income until you are well enough to get back on the tools and start earning money again.

What Are My Options?

Ideally you want to take out a genuine income protection policy rather than a cheap ‘sickness and accident’ type policy.

Often these cheaper policies will be acceptable for a tradie to get onto a work site, but they’re generally not as comprehensive as a genuine income protection.

If money is a real issue then a sickness and accident policy is better than nothing, but if you’re going to take out insurance then you might as well do it properly for a few extra dollars a month.

You should speak with your insurance broker or adviser about these options and they’ll be able to tell you more about the differences in cover as well as the pricing.

Here at Tradesman Insurance we can assist you with quotes and information on income protection insurance as well as a few alternative options.


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