alt=Workers Compensation vs income protection

Workers Compensation vs Income Protection

Workers Compensation will cover you for some things, but have you also considered Income Protection to ensure you are covered when you need it most?

Whether you’re a white-collar worker hammering away at your keyboard from 9 to 5, or a tradie getting your hands dirty day-in and day-out, you run the risk of getting sick or injured at work.

That’s why every Australian workplace has health and safety obligations: they must provide safe work premises, assess risk and have workers compensation insurance.

What workers compensation covers

As outlined on Fair Work Ombudsman , workers compensation may be paid out if you are injured at work, or if you become sick due to your work.i

Payments could cover your wages while you can’t work, your medical expenses, rehabilitation costs or a lump sum payment if you become permanently disabled or pass away.

It’s also important to note that in order to receive workers compensation you must prove that your injury is work related. Your entitlements and eligibility for various payments may vary from state to state.

When workers compensation may not be enough

Other accidents

Australian Bureau of Statistics data shows that most injuries (27%) take place during leisure time.ii

However, workers compensation will only cover you for work-related injuries and illnesses.

What would happen if you broke your leg tripping over the dog at home? Or if you fell from the roof and sustained a head injury while overseas riding a quakbike in Mykonos.

If you’re unable to work and not eligible to receive a workers’ compensation payment, you could be without a wage to cover your family’s regular food, accommodation and living expenses, not to mention the medical and rehabilitation costs that pile up with it.

Self employed

Workers compensation schemes may not cover you if you’re self-employed, a sole trader or an independent contractor, as stated on the business.gov.au website.iii Always ensure you check whether you’re covered by a workers compensation scheme. If you are not covered and became sick or injured, would your savings be enough to support you and your family while you recover?

Not only will you have living expenses, but meeting ongoing business expenses such as payments to suppliers or commercial leases may become challenging.

Income Protection Insurance

This is the type of insurance that offers peace of mind will protect you for injuries and illnesses sustained both at and away from work.

Income Protection Insurance could help take the financial pressure off your family while you’re unable to work by providing monthly payments of up to 75% of your income.

Extra benefits are also included in Income Protection which make payments on top of the 75% and can pay you until you are aged 65, this can equate to millions of dollars in payments if you were to be injured in your 30’s or 40’s.

For those of you that are retired or have children that are working full-time, consider this for them as you are most likely the person they will turn to when needing financial assistance. By paying anywhere between 2-5% of your income towards Personal insurances you can ensure you and your family are protected.

Contact us for more information or to see if you are suitable for income protection and check the appropriate level of cover for your personal situation by calling (02) 9188 1547. 

 

 

https://www.fairwork.gov.au

ii http://www.abs.gov.au/ausstats/abs@.nsf/mf/4825.0.55.001

iii https://www.business.gov.au/risk-management/insurance/workers-compensation-insurance

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Ronald Pratap

Principal Financial Planner at RP Wealth Management | Financial Planning l SMSF I Insurance l Property Advisory. Our purpose is to provide our clients with sound advice and direction to assist with their financial affairs and help them make the best choices in achieving what is important to them.

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