Flying Solo – Insurance for the Self-Employed

Flying Solo – Insurance for the Self-Employed

Working for yourself as a sole trader can have plenty going for it. Work/life flexibility. Lower overheads. Zero internal politics. But when the buck starts and ends with you, it also comes with a unique set of challenges – especially in the event you were to become sick or injured.

One of the greatest pressures as a sole trader stems from the fact you are not protected by workers’ compensation insurance. In fact when you’re a sole trader (or proprietor) you’re legally unable to take out workers’ compensation insurance – despite it being compulsory for other Australian employers. This means you could find yourself seriously exposed financially if you suffer any injuries or illnesses in the course of your work that prevent you from continuing to work in the future.  In other words, you really are flying solo and, as such, need to make your own arrangements to protect your future.

The first step is to closely consider the implications if you were to become sick or injured and unable to work. How would pay the medical bills? How would you meet your living expenses and other financial commitments? Who would run the business in your absence? Would that even be possible? Whilst not always pleasant to do so, these are the type of things you need to think about right now. After all, it’s far too late to start once something has already happened.

From our experience there are two types of insurance every sole trader should seriously consider. The first is personal accident and illness insurance. The second is income protection insurance. Both have tax-deductible premiums and they’re quite similar in other ways too. Below we take a closer look at each and outline how they could help you.

Personal Accident and Illness Insurance

This type of insurance pays you a percentage of your salary if you suffer an injury or event that prevents you from continuing to work and earn an income in the future. Subtly, every policy is different and you should pay careful attention to your insurer’s definition of ‘disablement’. That said, generally speaking Personal Accident and Illness Insurance is designed to cover you for scenarios such as the loss of, or loss of use of, a limb, permanent and total disablement and death. This type of policy can also help you cover any medical bills and may even pay out a lump sum for certain types of accidental injuries.

Some insurers also offer an alternative policy that provides for accident cover only. In other words you’d be protected if you suffered an accident that prevented you from working, but you wouldn’t be covered if it was the result of an illness.

Income Protection Insurance

This is a popular form of personal insurance that typically provides you with up to 75% of your income if you are unable to work as a result of an illness or accidental injury. This cover will apply for a defined period of time as set out in your policy. It could be as little as two years, or as much as up to when you turn 65 – so be sure to check!

Once you’ve served a nominated waiting period (normally between 30 and 90 days) you’ll start receiving your income protection benefits. Usually these are paid on a monthly basis, but in some cases an agreed lump-sum payment may be possible.

Do you need it?

Professionally, we’re inclined to answer with a resounding ‘yes’. That said every sole trader’s situation is different so it’s important to take the time to weigh up yours. To do this, take into account the specifics of your current business, personal and financial position – but also your plans for the future.

Some questions well worth asking yourself include:

  • Do you have a partner, children or any other dependents who rely on your income?
  • Are you the sole provider in your family?
  • What ongoing living and business expenses do you have?
  • How long would you be able to meet your financial commitments without the income from your business?
  • If you were unable to work for an extended period of time, would your business be able to continue?
  • Do you have loans/mortgages that would default if you were unable to work and earn an income?


Questions like these can be confronting for many sole traders without some form income protection insurance, as the answers are often sobering. If you’re unsure about the best way forward, or would like to ensure you are adequately protected, a great first step is to discuss your needs with your local Insurance Advisernet Authorised Representative. They’re personal insurance specialists and, as such, are ideally placed to help you.

Lewis Insurance Services is here to help our clients with understanding the options available for Income Protection & Personal Accident & Illness Insurance.  To discuss further, please contact Lewis Insurance Services on 07 3217 9015 or send us an email at .

This article was published by our AFSL Licensee, Insurance Advisernet Australia P/L (20/03/2017)

This information and any accompanying material does not consider your personal circumstances as it is of a general nature only. You should not act on the information provided without first obtaining professional financial advice specific to your circumstances and considering the Product Disclosure Statement.