How to Choose the Right Waiting Period for Your Income Protection Insurance

Income Protection Insurance is one of the most valuable forms of cover you can have as a tradie, contractor, or self-employed worker. It’s designed to replace a portion of your regular income if you can’t work due to illness or injury, allowing you to keep up with your mortgage, bills, and everyday expenses.

When it comes to selecting the right policy, one of the most overlooked but most important decisions is choosing your waiting period. The waiting period determines how soon your payments will start after you lodge a successful claim. Get this wrong, and you could end up paying too much for cover, or worse, waiting too long for benefits when you need them most.

In this guide, we’ll walk through what a waiting period is, how it works, the factors to consider, and how to decide which option is right for you especially if you’re in the trades industry.

What Is a Waiting Period in Income Protection Insurance?

The waiting period is the set amount of time between when you’re deemed unable to work due to illness or injury, and when your benefit payments actually start.

For example:

• If you choose a 30-day waiting period and break your arm on-site, you’ll need to be off work for 30 days before the insurer starts paying your benefit.
• If you choose a 90-day waiting period, you won’t receive payments for the first three months you’re unable to work.

Waiting periods can range from as little as 14 days to as long as 2 years, depending on your insurer and policy type.

Why the Waiting Period Matters for Tradies and Contractors

For those working in trades, time away from the job site often means money out of your pocket. Unlike salaried employees, many tradies and contractors don’t have extensive sick leave benefits or ongoing pay if they’re injured.

The waiting period directly impacts:

• How quickly you receive financial support after an injury or illness
• Your premium costs (shorter waiting periods mean higher premiums)
• Your cash flow and ability to recover without stress

Choosing the right waiting period for your Income Protection Insurance ensures you won’t be left struggling to pay the bills if something happens.

How Waiting Periods Affect Premiums

Insurers calculate your premium based on risk. If you choose a short waiting period, the insurer is more likely to start paying you sooner, which means they take on more risk and charge higher premiums.

• Short waiting period (14–30 days):
  
  • Higher monthly premium
  • Faster access to benefits
  • Ideal if you have no financial safety net
• Medium waiting period (60 days):
  
  • Balanced premium cost
  • Requires some savings to cover the gap
• Long waiting period (90+ days):
  
  • Lower monthly premium
  • Works if you have savings or other support

Think of it like this: a short waiting period is like having an emergency parachute. You can deploy it quickly, but it’s more expensive to maintain.

Factors to Consider When Choosing Your Waiting Period

1. Your Savings and Emergency Fund

If you have enough money saved to cover expenses for two or three months, you might opt for a longer waiting period to save on premiums.

Example:
A tradie with $10,000 in savings might comfortably handle a 60–90 day waiting period, using savings to bridge the gap.

2. Sick Leave or Employer Benefits

Some contractors working for larger companies might receive paid sick leave or workers’ compensation benefits. If these can sustain you during the early weeks, you can afford a longer waiting period.

3. Your Financial Obligations

Mortgage, rent, school fees, and other regular expenses won’t pause just because you’re injured. If your bills are high and your savings low, choose a shorter waiting period.

4. The Nature of Your Work

Trades work is physically demanding, and injuries can take longer to recover from. Electricians, carpenters, and builders often face downtime that could stretch beyond weeks or months. A shorter waiting period might be worth the higher premium.

Common Mistakes People Make When Choosing a Waiting Period

1. Focusing only on price: Picking the cheapest premium without considering your cash flow can leave you without income for too long.
2. Ignoring lifestyle changes: A waiting period that suited you five years ago might not fit your current circumstances.
3. Forgetting hidden costs: Medical bills, rehab, and transport costs can drain savings faster than expected.

Why Income Protection Insurance Is Essential for Tradies

Tradies face one of the highest workplace injury rates in Australia. According to Safe Work Australia, construction and trade-related industries see thousands of serious injury claims each year.

Without Income Protection Insurance, an injury could mean months without pay. With the right waiting period and benefit level, you can focus on recovery instead of stressing about bills.

Final Thoughts

Choosing the right waiting period for your Income Protection Insurance is about more than just premiums, it's about making sure you and your family are financially safe if life throws you a curveball.

Take the time to assess your savings, expenses, and risk level before locking in a policy. If you’re unsure, speak to a specialist who understands the needs of tradies and contractors.

At Tradies365, we can help you find an Income Protection Insurance policy with the right waiting period, so you get peace of mind knowing your income is protected when you need it most.