Self-employed? What you need to know about TPD claims when you’re the boss

If you’re self-employed, chances are you’ve got a LOT of things on your plate.  Not only does the buck stop with you when it comes to keeping your business going, you’re responsible for invoicing, BAS, HR issues, IT, wages and ensuring employees get their super entitlements – the list goes on. It’s also up to you to pay yourself super. Sometimes, it’s easy for your retirement income plans to get put on the backburner while you focus on others’ needs. You might even take a pay cut, or forgo wages or a salary for a period, for the good of the business. As a result, unlike people who are employed, your super may not necessarily be paid at regular intervals with your salary or wages. This can have important consequences, particularly if you are unable to work because of illness or injury before you intended to retire. In most cases, super accounts automatically hold sickness and injury insurance policies, which cover you for total and permanent disability (TPD) and income protection insurance. However, if you’re self-employed, injury and illness insurance can be a little more complicated – but for your future wellbeing (and that of your family) it’s worth getting your head around. This blog explores what you need to know about TPD and income protection insurance through your super if you’re self-employed. 

What are the issues self-employed people face when making TPD or income protection claims?

There are two key issues that may hamper self-employed people when it comes to making a TPD or income protection claim. 

#1 Not making regular superannuation payments 

If you’re self-employed and you don’t make regular superannuation payments, you’re not alone. Running a business often means putting yourself second – we get it. This might mean that you take a salary cut, or even forgo remuneration, during hard times.  You might take payments into a family trust for tax reasons. Whatever the reason, if you are not receiving an income in the form of a regular salary or wage, you are likely not paying yourself regular super payments. This can have implications for super that is paid for through your super. 

Your superannuation is not just a retirement savings account. The insurance attached your superannuation, such as income protection or TPD cover, provides a critical safety net if you become ill or injured and cannot work. That’s important regardless of whether you’re self-employed or employed by someone else. You should be aware that

• if you withdraw all or the majority of money from your super account, there may be no funds available to pay insurance premiums and cover will cease, and

• if you don’t make any contributions to your super fund for 16 months, your insurance will be cancelled. This period may be even shorter for some super funds. 

Are you comfortable being without TPD or income protection insurance if you become ill or injured?  This can cause big issues if you get sick or injured and are not able to work again, particularly if your sickness or injury is not covered by other compensation schemes (like workers’ compensation). 

#2 Not keeping adequate records or payslips that show hours worked or leave taken 

It’s often the case that when you’re the boss, you are the CEO, CIO, COO and HR team rolled into one. It’s easy to fall behind. As a result, self-employed people often fail to record hours worked, issue payslips and record leave. You may work irregular or flexible hours (whatever it takes to get the job done, right?). Again, this can cause difficulties if you need to make a TPD or income protection claim. Under most TPD and income protection insurance policies, the insurer will require proof:

• that you ceased work due to illness or injury on a particular date and have not worked since, 

• that you were completing certain duties or hours before you stopped, and 

• of the income you were earning before you ceased work.

Depending on the definition of ‘total and permanent disability’ in your insurance policy, you may also need to provide evidence if you have reduced your hours. 

What does this mean for me?

If you’ve read the above and it reads a little close to home, don’t worry. Our intention is not to make you to feel bad – it’s to ensure that you are aware of your rights! At Littles, we are TPD experts. We have helped many self-employed people just like you to claim TPD and income protection benefits and get around these issues. If you’re self-employed, and cannot work because of illness or injury, talk to Littles for high quality legal advice. 

Don’t delay – seek advice now

Do you have an injury or illness that prevents you from working, or just want to know more about what insurance you have under your super?  Get in touch with Littles for a free super claims check. We can help you understand what you’re entitled to. Know where you stand, and get peace of mind. 

Free advice and no upfront fees

Not only do we offer a FREE claims check – we handle most insurance claims on a no win, no fee basis. Our Head of TPD and General Insurance, Rowan McDonald, is an insurance law expert. If you think you might have a claim, get in touch with Rowan and his team for high quality legal advice. 

Please note that this information is intended to provide general guidance only. You should not act or refrain from acting on the basis of such information. Appropriate professional advice should be sought based upon your individual circumstances. For further information, please contact Littles. 

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