Life Insurance for Self-Employed & Sole Traders

Running your own business means wearing many hats — from sales to bookkeeping to keeping your clients happy. But one area that’s often overlooked is life insurance for the self-employed. Without an employer providing cover, you’re responsible for protecting yourself, your income, and your family if something unexpected happens.

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At Covermate Life, we provide access to multiple insurers to help self-employed Australians and sole traders explore their life insurance options.

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Why Life Insurance is Important for Self-Employed Australians

If you’re self-employed, there’s no sick leave, no paid annual leave, and no company-funded death or disability benefits. This means:

• If you can’t work due to illness or injury, your income stops.

• If something happens to you, your family may be left with debt or ongoing expenses.

• Business loans and personal guarantees may fall back onto your family.

 

Having the right life insurance in place can help provide peace of mind that your hard work is protected.

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Types of Cover Self-Employed and Sole Traders May Consider

1. Life Insurance – Pays a lump sum benefit to your nominated beneficiaries if you pass away. This can help cover debts, mortgages, or living expenses.

2. TPD Insurance (Total & Permanent Disability) – Provides a lump sum payment if you suffer a total and permanent disability and are unable to work again.

3. Income Protection – Can replace a portion of your income if you’re unable to work due to illness or injury.

4. Trauma (Critical Illness) Cover – Pays a lump sum if you’re diagnosed with a serious medical condition such as cancer, heart attack, or stroke.

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Common Considerations for the Self-Employed

• Proving income: Insurers may require evidence of earnings, such as tax returns or financial statements.

• Superannuation: Some policies can be held inside super, while others sit outside super. Each approach has different cash flow and policy considerations.

• Premiums: Premiums can increase over time, so it’s important to understand the different premium types (such as stepped and level premiums).

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How Covermate Life Supports You

Covermate Life has access to a panel of Australia’s leading insurers, including AIA, MLC, TAL, Zurich, OnePath, ClearView, and MetLife. This gives self-employed clients the ability to:

• Compare policies across multiple insurers.

• Review different cover types and features.

• Understand how premiums and benefits may vary.

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On average, our clients have found they can save 25–50% compared to their existing policies after reviewing their options.

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Next Steps

If you are self-employed or a sole trader looking to review or compare your life insurance, get in touch with our team today.

 

Back to Life Insurance by Occupation

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Frequently Asked Questions – Life Insurance for Self-Employed

1. Do self-employed people need life insurance?
If you’re self-employed or a sole trader, you don’t have employer-provided benefits such as sick leave, income protection, or default death cover. Life insurance can help provide financial protection for your family, business debts, and living expenses if something happens to you.

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2. Can sole traders get income protection insurance?
Yes. Income protection insurance is available to self-employed people, including sole traders. Insurers usually require proof of income, such as tax returns or financial statements, to establish your level of cover.

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3. Is life insurance tax-deductible for sole traders?
Generally, premiums for income protection insurance may be tax-deductible, while premiums for life, TPD, and trauma insurance usually are not. Tax treatment can vary depending on how the policy is structured, so it’s best to seek advice from a tax professional.

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4. What documents do self-employed people need to apply for cover?
Insurers often ask for recent tax returns, business activity statements (BAS), or accountant’s letters to verify your income. This helps them determine the level of cover available.

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5. Can life insurance be held through superannuation if I’m self-employed?
Yes, many self-employed people set up policies through their superannuation fund. This can help with cash flow, as premiums are paid from your super balance. However, the level of cover and definitions inside super may differ from policies held outside super.

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6. What’s the difference between stepped and level premiums?

• Stepped premiums start lower but increase as you age.

• Level premiums start higher but remain more stable over time.
  Each option has different cost implications depending on how long you plan to hold the policy.

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7. Can self-employed people bundle different types of insurance?
Yes. Some insurers allow you to bundle life, TPD, trauma, and income protection policies together, which may result in discounts.

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General Advice Only

The information on this page is general in nature and does not take into account your personal objectives, financial situation, or needs. Before acting on this information, consider whether it is appropriate for you. We recommend seeking personal advice before making any decisions regarding life insurance.