Income Protection for Self-Employed Australians (2026)

An overview of how income protection for self-employed individuals in Australia in 2026, including average Income Protection rates by age, gender and amount for some of Australia's top insurers.

Can Self-Employed People Get Income Protection?

Income protection is absolutely available for self-employed individuals. In fact, it can be one of the most critical forms of cover for sole traders, freelancers, and small business owners who don't have the safety net of paid sick leave.

To qualify, you must be:

  • Gainfully self-employed,
  • working at least 20 hours per week,
  • earning income from your own business or contract work.

These policies are designed to protect your personal exertion income — the profit generated by the work you personally do, after business expenses but before tax.

While the policies are largely similar to those available for employees, the application and claims process is slightly different, particularly in how your income is assessed and verified.

🚧 Why Self-Employed Workers Need Income Protection

  • No paid sick leave or annual leave
  • Unpredictable income or seasonal cash flow
  • Financial dependence on your ability to work

An injury or illness that prevents you from working could mean your income stops immediately, while your bills continue. Income protection can replace up to 70% of your income (or net profit, depending on the policy), helping you stay afloat while you recover.

Because you may not have sick leave, choosing a waiting period that matches your savings buffer is crucial. Common options are 30, 60, or 90 days — the shorter the wait, the higher the premium.

NOTE: Business-related fixed expenses are not covered under standard income protection - these could be covered under a separate business expenses policy.

How Much Does Income Protection Cost For Self-Employed Australians

Income protection premiums for self-employed Australians vary significantly depending on your occupation, risk classification, and smoking status.

Below is a guide to typical monthly costs, grouped by occupation to help you quickly find what's most relevant to you.

All figures are illustrative only and based on standard risk profiles. Actual premiums vary by insurer, benefit amount, waiting period, and policy structure.

Want a personalised estimate? Try this quick calculator.

Gender
Smoker?

📝 Applying for Cover as a Self-Employed Person

Applying for income protection as a self-employed individual comes with a few unique requirements, particularly around how your income is assessed and verified. Unlike salaried employees, you won't be asked for payslips — instead, you'll need to demonstrate your income using business financials.

Income Protection Insurance can replace up to 70% of your regular income.

Note: Some insurers offer a super contribution benefit at extra cost. This benefit ensures your retirement plan is not derailed. This can be particularly important to consider if you are interested in a long term income protection policy with a benefit period that extends to age 65.

📊 Income Assessment for Self-Employed Applicants

To calculate your monthly benefit, insurers typically require documentation such as:

  • Business Activity Statements (BAS)
  • Lodged tax returns
  • Profit and Loss Statements
  • Other accountant-certified financial records

Importantly, your benefit is based on net profit before tax — not gross revenue. That means it reflects your actual earnings after business expenses.

Because self-employed income can fluctuate, most insurers apply income averaging:

  • The standard approach uses your average monthly income over the 12 months before your disablement
  • If your income has dropped significantly (usually by 20-25% or more), and your employment situation hasn't changed, some insurers allow a 24-month average to be used instead — which can result in a more accurate benefit calculation.
Tip: Keep your financials up to date and adjust your policy as your income changes. While your benefit can't exceed the amount you applied for, it can be reduced if your recent income at the time of a claim doesn't support that level.

📋 Underwriting Considerations

Self-employed applicants may face more detailed underwriting, particularly around income stability:

  • 1. Income Verification: Insurers will closely review your financials to assess consistency and sustainability of your income.
  • 2. Business Structure: Some insurers may require additional documentation if you operate through a company or partnership.
  • 3. Medical Requirements: You may not need to undergo medical tests unless your answers indicate any concerns, but full disclosure is essential to avoid exclusions.

🏗️ Policy Structure Options

You can choose to hold your income protection policy inside or outside of superannuation:

  • Outside Super: Offers broader features, faster access to claim payments, and fewer restrictions — though premiums will need to be paid from your day-to-day cashflow.
  • Inside Super or an SMSF: May reduce immediate out-of-pocket costs but comes with stricter conditions of release and potential impact on retirement savings.

📌 Claim Time Considerations

When making a claim, your insurer will assess whether your illness or injury prevents you from performing the key income-generating duties of your business.

  • A clear medical diagnosis
  • Evidence of income loss using up-to-date financial records

If you're partially disabled and can still work in a reduced capacity, many policies offer a partial disability benefit, helping you transition back into work gradually.

Some policies also include relapse benefits, allowing you to resume a previous claim without restarting your waiting period if your condition returns within 6-12 months.

💡 What About Offsets?

Your monthly benefit may be reduced (offset) by other sources of income you receive during the claim period, including:

  • Ongoing profits from your business
  • Dividends or distributions
  • Passive income related to your profession

This is because income protection is designed to replace lost income, not supplement income you continue to earn. Be aware: if your business continues to generate income while you're unable to work, your benefit may be reduced accordingly.

Learn more about how offsets work in your policy to ensure you receive the correct benefit amount during your claim.

Frequently Asked Questions