TPD when you are self employed or a sole trader

Total and permanent disability, commonly known as TPD, is an insurance benefit that can be attached to a superannuation account or held as a standalone retail policy. Our plain guide to what a TPD claim is covers the basics. This article focuses on the questions that come up specifically for people who work for themselves rather than for an employer.

A self employed person or sole trader can make a TPD claim if they hold cover at the relevant date, regardless of whether it is inside a superannuation account or through a retail policy held outside super. The claims process itself works much the same way as it does for an employee, but the evidence used to prove work history and inability to continue can look different. Rather than payslips or an employer statement, self employed claimants typically need to provide business records and tax returns to establish their pre disability occupation and income.

Do self employed people actually have TPD cover?

Compulsory superannuation contributions generally apply to employees, not to income earned as a sole trader, and those contributions are what keep insurance cover active. Under the Protecting Your Super (PYS) legislation, if no contributions are made for 16 months, the fund must switch off your cover, unless you have actively opted to keep it in place. If you were not making regular contributions while self employed, and did not opt in to retain cover, you may not have held any cover as at your date last at work.

That said, if you have ever been an employee, even briefly, or made voluntary contributions to a fund, it is still worth checking whether cover was in place at the relevant date before assuming there is nothing to claim.

What insurers usually want to know

Insurers review the evidence to determine whether you are unable to work in your own occupation, or in some policies any occupation, because of illness or injury. For an employee, this is usually supported by a position description, a statement from the most recent employer about duties and length of employment, and payslips proving pre injury income. A sole trader has no employer to provide any of that, so insurers typically look for other material instead.

What an employee might provide	What a self employed person might provide instead
Position description from an employer	A written description of the work actually performed, in your own words
Employer statement confirming duties and hours	Business records showing the type and volume of work carried out
Payslips	Tax returns and business activity statements
Employer confirmation that duties cannot be modified	Evidence of what modified or reduced work would look like in your own business

None of this is a fixed checklist, since requirements vary between policies and funds. The general principle is that a sole trader needs to build the picture an employer would otherwise provide.

Proving income and work capacity

Self employed income can vary significantly from year to year, and business income is not always the same as personal income once expenses are factored in. Insurers will typically want several years of tax returns and activity statements spanning the period before and after the injury or illness, to understand what the business earned and how that changed over time.

Work capacity is assessed in a similar way. An employee either can or cannot perform a defined set of duties, but a sole trader may still be carrying out parts of the business, perhaps with help from family, contractors, or working reduced hours, while being unable to manage the physical requirements of the role. This is common, and does not automatically defeat a claim. However, it needs to be explained clearly and backed by medical evidence about what tasks you can and cannot safely perform.

The insurer’s own medical examination

Some TPD claims, whether it is made by an employee or someone self employed, involve an examination arranged and paid for by the insurer, with a doctor of its choosing. This is a standard part of the process, and is not necessarily a sign that anything has gone wrong. Our guide to the insurer’s medical examination explains what to expect and how to prepare, including why it helps to describe your actual day to day work rather than a general job title.

For a sole trader, it is worth being ready to explain the practical reality of the business, including physical tasks, hours, and organisation, since a generic title like “tradesperson” or “consultant” rarely captures what the role actually involved.

Structuring your business does not change the claim

Whether you operated as a sole trader or through a company, the TPD claim itself is assessed against you personally and against the definition in your policy, not against the structure of the business. What changes is the paperwork available to support the claim, since a company structure may produce different financial records, such as director’s fees or trust distributions rather than sole trader income shown on a personal tax return.

If your business structure has seen changes following your injury or illness, it is worth gathering records from at least three years prior to your date last at work, since insurers will often ask how income and duties looked at the relevant time, not just how the business looks today.

What to do next

If you are self employed and think you may be unable to continue working because of injury or illness, the first practical step is to identify every superannuation account you have held, current and historical, and check each one for TPD cover.

From there, gathering tax returns, activity statements and a clear written description of your actual duties puts you in a much stronger position before a claim is lodged. While many insurance policies do not have strict time frames as to when a claim can be made, it is still important to note that each policy is different. Our guide to time limits for personal injury claims in Australia explains this further, so it is worth seeking advice promptly rather than waiting. You can start with our entitlement check, or send us an enquiry if you would like to talk through your situation.