Is income protection the same as workers compensation?
No. While there are similarities between the two, they are different things.
Income protection a type of insurance that will pay you a regular income benefit if you’re unable to work because of an injury, illness or condition (or a combination).
There does not need to be a connection to employment in order to claim income protection.
Income protection can cover you for a percentage of lost income if you’re not able to work. Typically, this is somewhere between 75 – 85% depending upon the policy.
There may be a waiting period before you’re entitled to receive income protection payments. This period should be specified in your income protection policy, and is agreed upon when you enter into the policy. It could be up to 3 months.
And typically, your income protection payments will cease after an agreed period of time. Again, this will be detailed in your policy.
Income protection will not cover you for medical expenses, and will not pay you any lump sum compensation.
On the other hand, WorkCover is a type of insurance designed to help people if they’ve suffered an injury or condition that has some connection to their employment.
In a similar way to an income protection benefit, if your ability to work is impacted WorkCover can pay you a percentage of lost income. The percentage varies from 95% to 80%.
Like income protection benefit, there is a set period that you’re entitled to receive payments. In most cases, this is 130 weeks. However in some cases, if you have no work capacity because of your work related injury or illness, you’re entitled to receive payments in addition to 130 weeks.
In some cases, you’re entitled to receive top up payments from the insurer after 130 weeks if you’ve returned to work but cannot increased your work hours and earning because of your injury.
Unlike income protection however, WorkCover can also pay for the reasonable cost of medical and like expenses. So if you need medical treatment following an injury or illness, provided it is reasonable the insurer should pay for it.
In addition to this, there’s also two lump sums under the WorkCover system that you can pursue, these being an impairment benefit and a common law claim for damages.
If you want a more in depth comparison between income protection and workers compensation, you can visit this page.
Income protection and WorkCover are similar in that they both will compensate you for a percentage of lost wages if you’re unable to work.
However, unlike income protection, WorkCover will also pay for your medical expenses and there are two lump sum claims you can potentially pursue.