Tradies - are you suitably insured?

When you think about dangerous occupations, tradespeople don’t exactly spring to mind.

But according to Safework Australia, labourers and related workers had the highest incidence rates of work-related injury – nearly three times the rate of all occupations (1).

Add in the likelihood of diseases like cancer, many tradies are playing a dangerous game without life insurance and are risking their most important tool of the trade.

Workers’ Compensation can provide some cover for workers. But it can be a long wait for benefits and it doesn’t cover things that aren’t work-related, like cancer and heart disease – which can often be even more devastating financially for a family 

That’s where life insurance can fill the void.

What is life insurance?

Life insurance encompasses a number of different types of insurance covers, including life cover, income protection cover, total and permanent disability (TPD) cover, and trauma cover.

Life cover pays a lump sum if you die or are diagnosed with a terminal illness. The lump sum can be used to meet final expenses, pay off the family mortgage so that your family isn’t left without a home, fund future child education fees and set aside money to meet your family’s ongoing living needs.

Income protection cover pays up to 80% of your income if you can’t work because of sickness or injury. This money is essential in helping to meet your ongoing living needs, including meeting your mortgage repayments, when you are ill.

TPD cover pays a lump sum if you are totally and permanently disabled. The payout provides a funding mechanism to repay debts, pay medical bills and modifications to your home and motor vehicle as well as meet lifetime living costs.

Trauma cover pays a lump sum if you are seriously injured in an accident, or if you are diagnosed with one of a number of serious medical conditions, like cancer and heart attack. The proceeds can be used to meet medical treatment costs as well as provide financial support in a time where a spouse may wish to take time off work to nurture their ill partner.

If you run a business, you can also take out business expense insurance – helping you cover fixed business costs like rent, electricity and some employee salaries (often excludes income producing employees).

With so many different types of life insurance available, it’s important to discuss your own insurance needs with a financial adviser.

How much does life insurance cost?

Premiums vary depending on the product and a range other factors. As an example, a 30 year-old labourer can take out $200,000 life insurance, plus $2,500 a month income protection, for around $4.50* a day. (Source: OnePath Life Limited, ABN 33 009 657 176, AFSL 238341).

There are also a number of tax concessions associated with life insurance.

For starters, you may be able to hold your life and TPD insurance cover inside super. This means you can use your pre-tax salary to pay your premiums.

Another benefit specific to income protection and business expense insurance is that the premiums are generally tax deductible.

The best way to design an affordable insurance strategy that protects your family, your income and your debts, is to speak to a financial adviser.

(1) “Key Work Health and Safety Statistics Australia, 2010” Safework Australia

* Male, non-smoker, NSW, Income Secure Special Risk, indemnity, 30-day waiting period, 6-year benefit period & Increasing Claim Option (assumed salary is $40,000).

The worked dollar example is for illustrative purposes only. 

As this information has been prepared without considering your objectives, financial situation or needs, you should, before acting on this information, consider its appropriateness to your circumstances and speak to your financial adviser.