Yes. All 9 panel insurers underwrite IP for contractors, consultants, and multi-source earners. The application is more documentation-heavy than for a single PAYG salary, and the benefit at claim is recalculated against your actual recent earnings.
Under post-October-2021 APRA rules, every panel contract is indemnity-only. That means the benefit is calculated at claim time based on your recent income, not at policy inception. For variable earners, the income test at claim is the most important part of the application.
Documentation contractors need at quote and claim
- 24 months of personal tax returns and Notices of Assessment
- Business Activity Statements (BAS) covering the same period if you hold an ABN
- Accountant-prepared profit and loss statements for the business
- Contract documentation showing rates and continuity (recurring client contracts, day rates, retainers)
- Bank statements showing regular receipts
- Evidence of any other income streams (dividends, rental, royalty)
See TAL Accelerated Protection PDS (12 December 2024), Section 2.6 (Pre-Claim Earnings calculation); OnePath OneCare PDS (October 2025), Income Secure Cover (annual equivalent of the life insured's pre-claim earnings); AIA Priority Protection PDS (Version 32, 9 November 2025), Section 12.1 (Pre-disablement Income definition).
How insurable income is built up
The insurer combines eligible income streams into a single insurable amount, capped at the APRA 70% rule across the total. The two main risks for variable earners:
- Income source mix: Investment income, rental income (unless real estate is your profession), and partner income are generally excluded. A contractor with $200,000 in consulting fees plus $40,000 in rental income would typically be assessed on $200,000.
- Look-back period: Most panel PDSs use a 12-month look-back to calculate Pre-Claim Earnings at claim time. A bad 12 months immediately before disablement reduces the benefit. Some PDSs allow longer look-backs (24 months) for self-employed claimants.
Multi-source income treatment
A contractor with three concurrent clients is usually treated more favourably at underwriting than one with a single dominant contract. Diversified income is lower-risk to the insurer:
- Highly diversified (no single client over 40% of total): minimal loading
- Moderately diversified (one client at 50-70%): standard treatment
- Concentrated (one client at 80%+): may attract loading or shorter benefit period restriction
For PAYG-plus-side-business cases, the PAYG salary is usually fully insurable. The side-business component is assessed on net business income (after deductible expenses but before personal income tax).
What to ask the insurer at application
- How is insurable income calculated? (gross billings, net business income, drawings, distributions)
- What is the look-back period for Pre-Claim Earnings?
- Are regular bonuses, commissions, and overtime included in the insurable amount?
- If income drops between application and claim, is the benefit recalculated?
- Does the policy offer any 'income-link' or income-guarantee feature reducing variability risk?
Agreed value is no longer an option for new business
Before APRA's October 2021 reforms, agreed-value cover locked the benefit at policy inception and removed the look-back risk for variable earners. The reforms ended that. AIA Priority Protection PDS notes Agreed Value Income Protection insurance cover is only available if the Policy is replacing an existing Priority Protection Agreed Value Income Protection insurance cover. All new business across the panel is indemnity.
Common considerations for contractors
- Apply when your income is at or above your reasonable expected baseline. The 12-month look-back at claim works against you if you applied in a peak year and disable in a trough.
- For seasonal earners (tourism, agriculture), discuss with the insurer how the look-back smooths over the seasonal pattern.
- Director's drawings versus PAYG wages: how you pay yourself matters for the insurable-income definition. Speak to your accountant before lodging the application.
- Self-employed Business Expenses cover (see the Business Expenses FAQ) typically pairs with retail IP for this cohort to protect the business as well as personal income.