Workers Compensation verses Income Protection Insurance
April 1, 2011Workers compensation is for corporate workers who are injured on the job. If you agree not to sue, then they will provide you with workers compensation. In Australia, there is no consistency between the states and the benefit amounts and periods vary according to the state the work injury occurred. Workers compensation will provide four types of benefits for the employee that has a work related injury. They are;
- Income replacement
- Permanent impairment
- Death Benefits
- Medical Benefits
Workers compensation may pay one or more of these benefits. The benefit period ranges from 13 weeks to 9 years but it normally is subject to the maximum limits under the lump sum, or impairment benefit. The most significant concern is for illness or injuries when not at work. Workers compensation does not pay for those claims.
When these situations occur, this is where income protection insurance would come into play. Income protection insurance covers individuals twenty-four hours a day, any where in the world they are, and regardless of the impairment. If a person becomes ill or injured and is unable to work, income protection insurance takes effect.
In addition, income protection insurance can provide benefits in excess of AWOTE, which is normally the limit for most workers compensation. The limits with income protection insurance are that it normally replaces 75% of the pre-disability income. Depending on the option chosen, there is also a normal waiting period of 14 days to 90 days.
Another difference between workers compensation and income protection insurance is that income protection insurance does not have a maximum benefit payment, and can continue to age 65. When discussing the benefits of income protection insurance, consider your earning income if you should become ill or disabled not due to a work injury. It would be advisable to get income protection insurance.
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