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TPD and other disability insurance claims when you’re self-employed


Exploring issues self-employed people may face when making disability insurance claims

For most people that are employed and work for a salary or wage, super payments are a constant and certain thing, paid by their employer at regular intervals. In most cases, the superannuation accounts that receive these payments, also automatically hold sickness and injury insurance policies, which cover you for TPD, death and income protection insurance cover. However, if you are self-employed, injury and illness insurance can be more complicated.

Consequences of not making regular superannuation payments

If you are self-employed, you may not always have your business pay you a regular salary or a wage. You might forgo a salary or wage payment in lean times or you might forgo a wage for tax purposes and instead, take payments in the form of a dividend into a family trust or directly.

No matter what the reason, if you are not receiving an income in the form of a regular salary or wage, you may also not be paying yourself regular superannuation payments. This can impact the insurance coverage that you have for total and permanent disability (TPD), death benefits (life insurance) and income protection attached to your superannuation account.

Under the superannuation laws, super funds are not allowed to provide you with default insurance cover for TPD, death and/or income protection if there has been no contribution made into your superannuation account for more than 16 months. Some other super funds will stop your cover if there are no contributions for a lesser period (eg, 6 or 12 months).

This means that if you are self-employed and not taking a regular salary or wage and you do not pay yourself regular superannuation contributions, you may not have TPD, death and/or income protection insurance coverage. 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 or road accident compensation).

Other issues self-employed people face when making disability insurance claims

Aside from sometimes losing their cover, self-employed people often have difficulties claiming TPD or income protection benefits if they:

  1. do not keep pay and leave records for themselves;
  2. do not pay themselves a regular wage and, therefore, do not have payslips or regular income; and/or
  3. work odd hours and/or work flexibly or intermittently.

The above can cause issues for self-employed people if they have to make a claim for disability benefits. This is because under most TPD and income protection insurance policies, the insurer will require proof that:

  1. you have ceased work due to illness or injury on a particular date and that you have not worked since; and
  2. you were completing certain duties or hours before you stopped; and
  3. confirmation of the income you were earning before you ceased work.

People who are employed and work for wages usually rely on their HR team and other pay and leave records to prove these things. However, most self-employed people do not have this luxury and can have trouble providing this information when they cease work.

Further, if due to your illness you have reduced your hours or duties to accommodate your illness, it can impact the way that your TPD claim is assessed. Under some policies, your claim may be assessed under a different (more difficult) TPD definition if you were working reduced hours before you ceased all work (sometimes called “activities of daily living/ADL” definition).

Get help

We have helped many self-employed people to claim TPD benefits and get around these issues. Therefore, if you are self-employed and have:

  1. not always paid regular superannuation contributions into your account; and
  2. have ceased work or are struggling to continue working,

We recommend getting in touch for some free advice. It costs you nothing to find out where you stand and we run cases on a "no win no fee" basis.


Melbourne: 03 9448 8048

Brisbane: 07 3013 4300

Anywhere else in Australia:  03 9448 8048


[email protected]

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We are Australia's best value superannuation/insurance law firm. Other law firms charge nearly double (& sometimes more than double) what we charge. So, if you get a quote from them, or have a cost agreement, ask us what we will charge you.

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