First-person introduction: As a Melburnian who’s juggled a side business and contractor gigs, I used to assume that “TPD insurance” was just for people on payroll. Then a tradie friend—self-employed for years—had a serious injury and asked me the question that sparked this article: “Does TPD even cover people like us?” What I discovered is this: yes, self-employed and contract workers can be covered—often through superannuation—and sometimes via standalone policies. But the way eligibility, definitions, and evidence are assessed can look a bit different when you run your own show. This guide lays out, in plain English and with a Melbourne lens, how coverage works, what proof you’ll need, and the pitfalls that trip up ABN workers, sole traders, and contractors.

What Is TPD Insurance—Quick Refresher

TPD stands for Total & Permanent Disability. It generally pays a lump sum if illness or injury leaves you unlikely to ever return to work—either in your own job or in any job to which you’re reasonably suited by your education, training and experience (ETE). In Australia, many people have TPD cover inside their superannuation by default; others buy TPD as a standalone policy.

TPD isn’t an income stream like income protection; it’s a one-off amount designed to help with living costs, medical treatment, home modifications, debt reduction, and future planning when permanent incapacity ends your work life. Whether you’re PAYG or ABN makes less difference than you think—what matters is how the policy definition applies to your situation.

Can Self-Employed & Contractors Be Covered?

Yes. In Melbourne and across Victoria, self-employed people, sole traders and contractors are often covered via their super fund’s default TPD insurance (especially if they’ve been making contributions to a fund that includes group insurance). Many also choose to hold a standalone TPD policy tailored to their occupation and risk profile. Coverage revolves around the same core question: are you unlikely ever to return to suitable work—either your own occupation or any occupation—depending on your policy wording?

The Definitions That Decide Outcomes (Any vs Own Occupation, ADLs)

Your policy’s definition is the gatekeeper of entitlement:

• Any Occupation — You’re unlikely ever to work in any job you’re reasonably suited to by ETE. Common inside super, often stricter for claimants.
• Own Occupation — You’re unlikely ever to work again in your specific occupation held prior to disability. Often more claimant-friendly; more available in standalone policies.
• ADLs (Activities of Daily Living) — Sometimes used when occupation can’t be assessed. It’s a functional daily-living test (bathing, dressing, etc.), usually harder for purely vocational impairments.

For self-employed and contractors, arguments around “any occupation” can be nuanced—insurers might suggest alternative jobs within your ETE. That’s where robust vocational evidence comes in, clarifying why realistic alternatives aren’t feasible given your permanent restrictions.

Inside Super vs Standalone Policies (Key Differences for ABN Workers)

Inside super: Many Victorian sole traders have TPD via their super—sometimes without realising. Pros include convenience and premiums paid from super. Cons can include stricter definitions (often “any occupation”), super release rules, and taxation considerations.

Standalone TPD: Purchased directly from an insurer or via advice. Pros include custom sums insured and access to “own occupation” definitions for certain professions. Cons include out-of-pocket premiums and underwriting considerations.

Some contractors hold both. If policy definitions are met independently, multiple claims can be possible. Always read each policy’s wording—coverage under one doesn’t guarantee entitlement under another.

Eligibility & Proof When You’re Self-Employed

TPD recognition hinges on permanent loss of capacity under the policy definition. For ABN workers, proof involves both medical and vocational/financial evidence:

Medical Evidence

• Specialist reports (orthopaedic, neurological, psychiatric, etc.) addressing diagnosis, treatment response, permanency, and why you cannot sustain suitable work.
• GP summaries tying treatment, referrals, and functional limits into a coherent narrative.
• Functional assessments: FCEs for physical capacity; neuropsychological testing for cognitive deficits.

Vocational & Financial Evidence

• ETE profile: education, training, roles, licenses, and why none are sustainable given restrictions.
• Business documentation: ABN history, client mix, contracts, attempts at role modification or delegating duties, and why those measures failed.
• Income records: tax returns, BAS, profit-and-loss, and invoice history showing decline/inability to perform critical duties.

Step-by-Step: Running a Strong TPD Claim as a Contractor

1. Confirm all cover — Contact every super fund you’ve contributed to (past and present). Request TPD policy wording and claim forms. Note the sum insured.
2. Identify the definition — “Any occupation” vs “own occupation” vs ADLs. Your strategy and evidence must match this test.
3. Brief your clinicians — Ask them to write to the definition (“unlikely ever to return to suitable work”), not generic medical letters.
4. Map your ETE & core duties — Describe the actual tasks your business/contract role requires: on-tools work, quoting, lifting, driving, late shifts, face-to-face client duties, time pressure, safety-critical tasks.
5. Document adjustments you tried — Hiring staff, reducing hours, admin-only transitions, remote-first workflows, tool/equipment changes, and why they failed (cost, safety, flare-ups, reliability).
6. Prepare financial evidence — Income trend lines, disrupted invoicing, lost contracts, and costs of attempted role redesign.
7. Complete forms with precision — Consistency on dates, injuries/illness timeline, duties you can/can’t do, treatment history.
8. Submit a targeted pack — Quality over volume; each document should prove something relevant to the policy test.
9. Engage with insurer requests — Attend IMEs, provide records promptly, and keep copies. Follow up regularly yet politely.
10. Seek help early if stuck — If delays/denials arise, legal specialists can escalate, address evidentiary gaps, and manage disputes.

Financial Evidence: Income, Invoices & Business Viability

Unlike PAYG roles, self-employed work blends ownership and labour. Insurers often ask: could you keep the business running by hiring others, even if you personally can’t do on-tools work? To answer convincingly:

• Show which tasks only you could do (special licenses, trade expertise, client trust, design sign-off, site supervision) and why replacement isn’t practical or safe.
• Provide numbers: margins after hiring, cash-flow impact, lost tenders due to absence, and unsustainable overheads.
• Explain reliability issues: flare-ups, cognitive fatigue, medication effects, safety risks that prevent even “light duty” owner roles.

For contractors in knowledge roles (e.g., IT, design, consulting), highlight cognitive demands (sustained attention, deadlines, error-risk) and why “reduced hours” or “remote admin only” doesn’t create a reliable, sustainable occupation.

Mental Health & Physical Conditions in the Self-Employed Context

Physical conditions (spinal, orthopaedic, neurological) can make core duties impossible—lifting, overhead work, driving long distances, working at heights. Mental health conditions (major depression, PTSD, bipolar disorder, severe anxiety) often affect reliability, decision-making, stress tolerance, and client-facing duties. Both can meet TPD definitions when permanent and work-preclusive under the relevant test.

For ABN workers, evidence should explicitly link symptoms to business-critical tasks (quoting, supervision, safety checks, high-stakes presentations) to demonstrate why no realistic role remains within your ETE.

Waiting Periods, Timeframes & Victorian Realities

Many policies require a period off work (e.g., several months) before assessment. In Victoria, expect multiple medical opinions (treating specialists and insurer-appointed IMEs). Organise reports early to prevent bottlenecks, and keep a claim log (dates, contacts, next steps). Complex ABN evidence (financials, contracts, ETE mapping) takes time—front-loading quality documentation often shortens the overall process.

Common Exclusions, Limitations & Grey Areas for Contractors

• Pre-existing conditions — Some policies exclude conditions that arose before cover began or within waiting periods.
• Cover cessation — Low super balances or unpaid premiums can cause default cover to lapse without notice.
• Substance-related clauses — Disabilities primarily due to certain behaviours may be excluded (policy-specific).
• “Any occupation” hurdle — Insurers may argue alternative roles within your ETE exist (e.g., admin-only director). Rebut with concrete task analysis and numbers.
• ADL pathways — Harder for vocational claims unless the policy provides a mental health or occupational alternative.
• Insufficient permanency — Early claims with limited treatment history can be deferred or declined.

Common Pitfalls & Practical Tips (Melbourne Focus)

• Not checking all funds — Contractors often have multiple super accounts from different gigs. Each might carry TPD.
• Vague duty descriptions — “I can’t work” isn’t enough. Detail the specific tasks you can’t do and why adjustments failed.
• Ignoring financial viability — Show the numbers: after hiring/retraining, is the business still viable? If not, why?
• Inconsistent records — Align medical notes, invoices, BAS, and RTW attempts. Address contradictions up front.
• Under-documenting mental health — Psychiatric function (reliability, concentration, stress tolerance) must be clearly evidenced.
• Missing time limits — Dispute pathways can have strict deadlines—seek advice early.

FAQs: Self-Employed & Contract Workers

Is TPD different for self-employed people?

The legal test is the same; the evidence differs. You’ll need to link incapacity to your core business duties and show why alternatives aren’t realistic.

Can I keep my business open and still claim?

Possibly—if you’re personally unlikely ever to perform suitable work. Show why hiring or restructuring doesn’t create a sustainable, safe role for you.

Do I need income protection as well?

TPD is a lump sum for permanent incapacity. Income protection is monthly income replacement for partial/temporary incapacity. Many contractors hold both.

What if my claim is denied?

You may have review options. Time limits apply. Consider legal advice early to protect your rights and fill evidentiary gaps.

Does mental illness qualify for contractors?

Yes, if permanent and well-evidenced against the policy test. Strong psychiatric and vocational evidence is crucial.

Final Thoughts & Where to Get Help

Self-employed and contract workers in Melbourne can be covered under TPD—often through super—and sometimes via standalone policies with more flexible definitions. Your claim’s success usually hinges on how well you connect the dots between permanent medical restrictions and the actual duties your work and business require, plus clear evidence that reasonable adjustments and hiring don’t solve the problem.

If you want experienced help to map your duties, assemble the right medical and financial evidence, and manage insurer requests or denials, I recommend speaking with the team at Hymans Legal. They understand how Victorian claims are assessed in practice and can help you present the strongest possible case the first time.

Recommended: Hymans Legal — Call 1300 667 116

General information only: This article is not legal or financial advice. Always seek advice tailored to your circumstances and policy wording.