Summary

Yes, you can claim income protection insurance while you are on WorkCover in Victoria.

The real question is whether doing so is worthwhile.

If you are receiving weekly payments under the Victorian WorkCover scheme, and the income protection payment relates to your compensable work-related injury, your weekly payment entitlement may be reduced because the income protection payment can be taken into account when calculating what WorkCover has to pay.

Many income protection policies also contain an offset clause. This means that the income protection insurer may reduce the amount payable because you are already receiving WorkCover weekly payments.

As a result, in many cases each benefit effectively offsets the other.

Quick Answer

What Is Income Protection Insurance?

Income protection insurance is insurance that provides a regular payment when you are unable to work because of an injury, illness or medical condition.

Income protection insurance can be:

• Attached to your superannuation fund.
• Purchased through a private insurer.
• Arranged through a broker or financial adviser.

Some superannuation policies include income protection automatically. Others require you to apply for the cover.

The amount payable, waiting periods, benefit periods and offset provisions vary from policy to policy.

You should seek financial advice regarding any income protection policy and whether it is suitable for your circumstances.

You can also read our separate article explaining the differences between WorkCover and income protection.

Can You Receive Income Protection and WorkCover at the Same Time?

Yes.

Having a WorkCover claim does not prevent you from lodging an income protection claim.

However, being entitled to both benefits does not necessarily mean that you will receive the full amount from both sources.

Whether you receive an additional financial benefit depends on:

• Whether you are receiving WorkCover weekly payments.
• Whether the income protection claim relates to the WorkCover injury.
• The wording of the income protection policy.
• Whether offset provisions apply.
• The amount payable from each source.

Receiving Income Protection When You Are Not Receiving WorkCover Weekly Payments

If WorkCover is paying medical and like expenses but you are not receiving weekly payments, claiming income protection may make sense.

For example, this situation may arise if:

• Your weekly payments have stopped after 130 weeks.
• You are no longer entitled to weekly payments.
• Your WorkCover injury does not currently incapacitate you for work.
• Medical and like expenses continue to be paid.

In that situation, receiving income protection would not affect your entitlement to:

• Medical and like expenses.
• An impairment benefit claim.
• A common law claim.

Whether you receive income protection will still depend on the terms of your policy.

Receiving Income Protection While Receiving WorkCover Weekly Payments

Many income protection policies contain an “offset clause”.

An offset clause generally means that the income protection insurer will reduce what it pays because you are already receiving money from another source.

In this context, that source is usually WorkCover weekly payments.

How the offset applies depends on the wording of the individual policy.

Some policies may treat different injuries or conditions differently.

In addition, Victorian WorkCover can also take income protection payments into account when calculating weekly payments.

As a result:

• The income protection policy may reduce its payment because of WorkCover.
• WorkCover may reduce weekly payments because of income protection.

Effectively, each benefit can offset the other.

What If the Income Protection Claim Relates to a Different Injury or Condition?

There may be an exception where the income protection claim relates to an injury or condition that is unrelated to the WorkCover claim.

The situations where this will produce a meaningful financial advantage are likely to be limited.

Generally speaking, you would need to:

• Have income protection insurance.
• Have the income protection claim accepted.
• Have a condition that is not connected to the WorkCover claim.
• Be entitled to a higher income protection benefit than the amount otherwise payable through WorkCover, or have policy wording that does not offset payments in those circumstances.

Even then, you should consider whether making the claim immediately is the best course of action.

In some situations a person may receive only a very small additional benefit because the two payments offset each other.

You may need both legal and financial advice regarding these issues.

What Happens to My WorkCover Payments If I Receive Income Protection?

For Victorian injuries occurring on or after 5 April 2010, WorkSafe Victoria states that income protection payments relating to the compensable injury can affect the calculation of weekly payments.

WorkCover refers to a “supplemental pension limit”.

The supplemental pension limit is equal to 100% of a worker’s pre-injury average weekly earnings, including overtime and shift allowances.

For every dollar by which the combined income exceeds this limit, the WorkCover weekly payment is reduced by one dollar.

Example

Assume:

• You receive $450.40 per week under an income protection policy.
• Your pre-injury average weekly earnings were $1,000 per week.
• Eighteen months after your injury, your WorkCover weekly payment is $700 per week.

The combined total is:

$1,150.40 per week.

Because the supplemental pension limit is $1,000 per week, the combined amount exceeds that limit by $150.40.

In that situation:

• The income protection insurer continues paying $450.40.
• The WorkCover weekly payment is reduced by $150.40.
• The total received becomes $1,000 per week.

Does WorkCover need to be informed of income protection payments?

For Victorian claims, workers receiving a pension must notify the WorkCover agent in writing within 14 days of first receiving the payment and provide details regarding the nature, source and amount of the pension.

Workers must also notify the WorkCover agent if the amount changes.

Is It Worth Claiming Income Protection While on WorkCover?

It depends.

If you are not receiving WorkCover weekly payments, income protection may provide a useful source of replacement income.

However, if you are already receiving WorkCover weekly payments, there is often little financial benefit because:

• WorkCover may reduce weekly payments.
• The income protection insurer may reduce its benefit.
• The two benefits can offset each other.

Before making a claim you should consider:

• The wording of the income protection policy.
• Any offset provisions.
• Whether the claim relates to the WorkCover injury.
• The amount of weekly payments being received.
• Whether WorkCover weekly payments may cease in the future.
• Whether obtaining financial or legal advice would be beneficial.

Frequently Asked Questions

Can you claim income protection while on WorkCover?

Yes.

Can you receive income protection and WorkCover weekly payments at the same time?

Potentially yes, but offsets may apply.

Does income protection affect WorkCover weekly payments?

It can. Victorian WorkCover may take income protection payments into account when calculating weekly payments.

Does WorkCover affect income protection payments?

Many income protection policies contain offset provisions that reduce the amount payable if WorkCover benefits are being received.

Does income protection affect WorkCover medical expenses?

No. Receiving income protection does not, by itself, affect the payment of medical and like expenses.

Does income protection prevent an impairment benefit claim?

No.

Does income protection prevent a common law claim?

No.

What if my WorkCover weekly payments have stopped?

Income protection is often more useful where weekly payments have ceased and the policy still responds.

What if my income protection claim relates to a different injury?

The interaction between the payments may be different, depending on the circumstances and the policy wording.

Conclusion

You can claim income protection while on WorkCover in Victoria.

However, it is usually only worthwhile if you are not receiving WorkCover weekly payments or if the income protection policy provides an additional financial benefit after offsets have been taken into account.

If you are receiving weekly payments for a compensable injury, both WorkCover and the income protection insurer may reduce what they pay because of the other benefit.

For that reason, it is important to understand how the two payments interact before lodging a claim. In many situations, claiming income protection while receiving WorkCover weekly payments may result in little or no additional financial benefit.