Why income protection for merchants is especially important

There are many inherent risks associated with doing business, being a trader, and also being a sole trader can add significantly to that risk. Questions arise about the safety of your work. What happens if I am injured at work? How will I support my family? How will I meet my financial obligations? These are just some of the concerns of traders working in an uncertain environment on a daily basis.

Consider an example of a one-man lawn business, with many services offered, including mowing, mulching, and landscaping. Now imagine if the owner of this business broke his leg on the job after falling off a ladder. The doctors said that he was quite unwell and that he would not be able to work for a few months. Unfortunately, the landscaping business owner did not have an income protection policy and has suffered not only the physical pain of his injury, but also financial hardship and loss of business. Many of his loyal customers have sought out other gardeners to meet his gardening needs and the landscaping business owner has to rely on his wife to support him and his three children. Obviously, this is a less than ideal scenario.

Income protection is a form of business insurance that can protect up to 75% of your gross income in the event you are unable to work due to injury or illness. Income Protection Insurance, unlike other insurance policies, will provide a monthly outlay if you are unable to work due to illness or injury. Income protection is important for all workers, but it is especially essential for tradespeople. Feedback from the Australian merchant insurance industry indicated that merchants have the highest number of lost income claims compared to other occupations that often suffer loss of income due to injury. It could be concluded that traders are at a higher risk of losing their income.

Income protection is widely available from companies that offer insurance specifically for merchants. Most standard merchants will have no problem receiving income protection coverage. However, the premium increases depending on the type of trade, age and your status as a smoker. Your premium generally increases as you get older. Riskier trades also face higher premiums.

There are several options available under income protection policies. The option chosen on the application will affect your ability to receive claims payments if illness or injury arises.

benefit period

The benefit period refers to the maximum period of time that you will continue to receive benefits after you have claimed for each event.

Waiting period

The waiting period describes the period of time from the date of your illness or injury that you are unable to work before you begin to receive benefits on your claim. For a merchant, the typical time frame is 30 days before he is eligible to receive benefits.

Regardless of the cost of the premiums, the loss of income insurance payout is a small price to pay for the potential loss of income and business a tradesperson may face if they become injured or ill. Self-employed individuals are generally not eligible for workers’ compensation, so the need for income protection is much greater. Allay these fears by researching possible income protection policies offered by different companies. Income protection policies offer benefits to merchants if they are unable to conduct their normal business activities. Protect yourself today.