Going out on your own: insurance questions when you leave a salary behind

Call her Mel. Composite, not a client. Twelve years in a corporate marketing job, and she’s finally doing the thing: handing in her notice to freelance. She’s modelled her runway, priced her day rate, sorted the ABN. Her leaving checklist covers laptop, super, farewell drinks. Nowhere on it is the sentence “figure out what happens to my insurance”, because Mel, like most employees, doesn’t think of herself as having insurance. It’s just something that lives wherever the payslip goes.

That’s exactly the problem. Employment quietly props up a surprising amount of a person’s cover, and when the salary stops, some of those props get pulled without a single letter of warning. Here are the questions worth checking before, ideally, the notice goes in.

What does leaving a salary actually change?

More than the income line. The honest inventory:

1. The safety nets that were never insurance. Sick leave, annual leave, an employer with legal obligations when you’re injured at work. These all vanish on the last day. Freelance Mel’s first bout of flu is unpaid; employee Mel’s wasn’t.
2. The super contributions feeding your account. Default insurance in super is paid from your balance, and the rules around inactive accounts mean cover doesn’t necessarily survive an account going quiet. More on that below, it’s the big one.
3. Any group cover attached to the job itself. Some employers provide salary continuance or group life cover as a workplace benefit. If yours does, it generally doesn’t follow you out the door.
4. Your insurability profile. Applications for cover assess your occupation and income. Newly self-employed people can face different questions, particularly around proving income they haven’t earned yet, which makes the timing of any application worth thinking about.

What’s the deal with super cover after you leave?

The mechanism, plainly: The reforms rolled out between 2019 and 2021 mean funds switch off insurance on accounts that have gone inactive, and don’t automatically attach it to low-balance accounts. ASFA’s research puts it bluntly: millions of quiet accounts had insurance switched off. An employee going out on their own is a textbook candidate, contributions stop or turn patchy, the account drifts toward inactive, and the cover attached to it eventually goes with it.

Source: ASFA, Insurance through superannuation research, February 2026.

The trap is that it happens silently, months or years after the farewell drinks, and gets discovered at the worst possible time. If any part of your plan is “I’ve still got the cover in my old fund”, that plan has an expiry date you haven’t looked up.

Worth knowing: funds have their own rules about keeping cover active, including options around contributions and elections to maintain insurance, all set out in the fund’s insurance guide. What suits your situation is a personal question, but knowing your fund’s rules is just reading.

The before-you-quit checklist

Check	What you’re looking for
Every super account you hold	myGov linked to the ATO lists them all, including forgotten ones
What insurance each account carries	Type, amount, and the premiums coming out of your balance
Your fund’s inactivity rules	What keeps cover alive, and what switches it off
Any employer group cover	Whether it exists, and confirmation it ends when you do
Your honest runway	Savings weeks, because that number now does the job sick leave used to

Twenty minutes, mostly logins. Do it while you’re still employed, because the information is easier to gather and your options are wider before the change than after.

What’s the catch?

What surprises people: the window where you most need to sort cover is also the window where it’s trickiest to arrange. A brand-new freelancer has no track record of self-employed income, which is exactly what income protection applications like to see. Meanwhile the employee version of you, with the payslips and the stable occupation, walks out the door on your last day. People who sort their thinking before the leap keep more doors open than people who arrive at the same questions eighteen months in, with one lumpy tax return and a lapsed super account. That’s a reason to put insurance on the leaving checklist, next to the laptop, not a reason to stay employed.

Where to from here

If a leap like Mel’s is on your horizon, the move is simple: run the checklist above, then bring what you find to a no-obligation chat with Justin, ideally while the notice letter is still a draft. He’ll help you see what leaving changes for your cover specifically, with no pressure about the leap itself, that decision’s all yours.

Related reading

• Did your super fund quietly switch off your insurance?
• If your body is your business: cover questions for tradies
• The types of personal insurance

General advice only. It does not take into account your objectives, financial situation, or needs. Consider whether it is appropriate for you and read the relevant Product Disclosure Statement (PDS) before deciding. Whether a benefit is payable depends on the specific policy terms.