Why do I need income protection insurance if I have workers’ compensation?
Have you ever wondered what would happen if you suffered a serious injury or illness which meant you were unable to work? For many people, the reality of being without the means of earning an income could mean significant financial hardship for them and their families. As an employee your employer will (or should) have workers’ compensation insurance to cover themselves and you against workplace related accidents and injuries but workers’ compensation alone is not enough to ensure you are fully protected.
Taking out an income protection policy can give you a level of coverage that is far more extensive than relying on your employer’s workers’ compensation policy. If you become incapacitated as a result of a non work related illness, workers’ compensation will not cover you whereas the right income protection insurance can.
Workers’ compensation has many disadvantages including a cap on payments, a limit to how long you can receive payments for and a complicated claims process. With income protection insurance you get to choose your benefit period and can claim up to 75% of your pre-disability salary until you are age 70 if you wish.
If you are a sole trader or otherwise self employed it is even more important to take out income protection insurance as without an employer you generally will not even have access to workers’ compensation.
By taking out income protection insurance you are taking a proactive approach to safeguarding yours and your family’s financial future. Workers’ compensation is there to protect you to a certain degree in the event of a work related injury – income protection insurance can be there to protect you financially against a much broader range of illness and injury.