skip to log on skip to main content
VoiceOver users please use the tab key when navigating expanded menus

Income protection insurance for the self-employed FAQs

Published 9 October 2018

Questions you might have about income protection insurance if you're self-employed.

1. I’m self-employed. Can I get income protection insurance?

Absolutely. Income protection insurance is for anyone who earns an income. 

You will generally need to be working more than 20 hours a week.

2. Why do I need income protection insurance?

One of the challenges of self-employment is the lack of paid leave and workers’ compensation entitlements. 

If you become ill or injured, you may be left to your own resources, so it’s wise to have insurance cover to fall back on.

3. I’m a self-employed contract worker. Can I still get income protection?

Yes. While working as a contractor can sometimes feel like being an employee, you’re still considered to be self-employed. 

While your premium will vary depending on what industry you’re working as a contractor in, you should be able to insure your income.

4. What is considered income for a self-employed person?

It’s your business’s income from your personal effort minus the costs and expenses of generating that income. 

It’s typically only after submitting their tax return that a self-employed individual has an exact figure for what their income was over the last financial year. 

This is why insurers and financial institutions ask to see a couple of tax returns before providing a service to business owners.

5. Can I include my business expenses under my policy?

No, income protection covers your income only. For example, if you have revenues of $150,000 and business expenses of $50,000, your income is calculated as being $100,000, not $150,000.

6. Is my premium tax deductible?

Generally, insurance premiums paid on income protection policies held directly by you as an individual (rather than through your superannuation fund) may be tax deductible, with any benefits paid being treated as assessable income. We recommend that you seek professional tax advice from an independent tax adviser or registered tax agent specific to your individual circumstances.

7. What’s the difference between an indemnity and agreed value policy?

Most self-employed people find their income fluctuates from one financial year to the next. 

This can be due to external factors, such as the industry they are a part of booming or busting. It can also result from individual choices, such as taking six months maternity or paternity leave.

There are two types of income protection policies: agreed value and indemnity. An agreed value policy pays out a set amount if anything goes wrong, regardless of how much or little you’ve been earning before making the claim. An indemnity policy provides payout based on what you’ve been earning in the 12-24 months before making a claim, up to a maximum of the benefit amount.

Let’s say you’re currently earning $100,000 and take out an agreed value policy based on 75 per cent of that income. If anything does go wrong in the future, you will be paid $75,000 a year. 

However, if you go for an indemnity policy, any future payout will be based on the highest average income what you’ve earned in any 12 months during the previous two financial years. If you’ve earned $100,000 or more, you’ll still be paid $75,000 a year. But if you’ve averaged an income of only $10,000 a year, you would be paid only $7,500. 

It should be noted that if your income increases your payout does not automatically increase as well. Your maximum payout will be determined by the benefit amount. 

If your income does increase significantly in the following years, you may wish to adjust your agreed value or indemnity policy to reflect your changed circumstances.

8. I’m a small business owner, are there any other special things I need to consider?

You may want to look into other forms of insurance to make sure you’re covered if things other than your health go awry. These could include: 

  • professional indemnity insurance if you provide a professional service
  • product liability insurance if you sell products 
  • tool insurance if you’ll need to quickly replace vital equipment in the event of theft or damage. 

Speak to an insurance professional for assistance in what insurances might be appropriate for you and your business. 

This information is current as at date of publication and is subject to change.

The issuer of this information is ANZ. While ANZ has taken care to ensure that this information is from reliable sources, it cannot warrant its accuracy, completeness or suitability for your intended use. To the extent permitted by law, ANZ does not accept any responsibility or liability arising from your use of this information.

Australia and New Zealand Banking Group Limited (ANZ) ABN 11 005 357 522 AFSL 234527 is an authorised deposit taking institution (Bank) under the Banking Act 1959 (Cth). The issuers of these products are not Banks. Although ANZ distributes these products, these products are not a deposit or other liability of ANZ or its related group companies. None of them stands behind or guarantees the issuers or the products. 

ANZ Income Protection covers two separate financial products – Income Cover is issued by OnePath Life Limited (OnePath Life) (ABN 33 009 657 176, AFSL 238 341) and Involuntary Unemployment and Family Care Cover are issued by OnePath General Insurance Pty Limited (ABN 56 072 892 365, AFSL 288 160) (OnePath General). We recommend that you read the ANZ Financial Services Guide (PDF 479kB) and ANZ Income Protection Product Disclosure Statement and Policy Document (PDF 272kB) (available online or by calling 13 16 14) before deciding whether to continue to hold this product. This PDS relates to policies issued from 1 June 2019. Previous products (with the same name) may have different features and benefits. If you hold insurance based on an earlier PDS, please contact us if you have any questions or to have a PDS sent to you.

This information is of a general nature and has been prepared without taking account of your objectives, financial situation or needs. You should consider whether the information is appropriate for you having regard to your objectives, financial situation and needs. 

The ANZ App is provided by ANZ. Super, Shares and Insurance (if available) are not provided by ANZ but entities which are not banks. ANZ does not guarantee them. ANZ recommends that you read the ANZ App Terms and Conditions available at and consider if this service is appropriate to you prior to making a decision to acquire or use the ANZ App.

Apple, the Apple logo, iPhone and iPad are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.