16 Mar Understanding Worker’s Compensation & Income Protection
Several insurance protection options are available. There is the Worker’s Compensation, Income Protection, Disability Income Insurance, Sickness & Accident Insurance, Accident & Illness Insurance and Injury & Illness Insurance. Each one is about cover in case of an illness, injury or death but means differently over the other.
- What is Worker’s Compensation/Work Cover?
As a waged employee not working under an owned ABN, your employer has to have you covered under the Workers Compensation Insurance. It is an employer’s obligation to ensure that employees are protected in case of illnesses or job-related injuries.
Worker’s Compensation is a State Government body that mandates insurance for workers but unlike income protection, it covers medical and rehabilitation (if needed) expenses and an income generally up to $52,000 per annum for up to 2 years then reducing thereafter.
- What is Income Protection Insurance?
It is also called Disability Income Insurance or Income Replacement Insurance which aims to compensate an insured in case of inability to work due to an injury or illness and includes all income generally up to 75% of total personal exertion income. It does not pay for additional medical expenses. Although your monthly benefit can be paid to age 70 increasing every year in line with CPI indexation.
Another type of insurance is Sickness & Accident, also called Accident & Illness or Injury Illness insurance, which works like Income Protection in an inferior way.
A tradesman who wants to know which cover would work best must understand that each type works differently for an employee, a sole trader, a subcontractor or a business owner.
Generally, sole traders and most subbies do not qualify for Worker’s Compensation, only for Income Protection. Those who qualify for Worker’s Compensation must remember that Income Protection may be better due to its offer of long term financial solutions. Also, compared with Sickness & Accident Insurance, Income Protection policy offers a more comprehensive coverage.
An expert trade insurance financial or insurance adviser can help give a better understanding of how each type of cover works and which one will work best for you.