Regardless of the type of work you do, there is always a possibility of falling sick or getting injured. That’s why every Australian workplace has a health and safety obligation to provide safe work premises, assess risk and have workers’ compensation insurance.
What is workers’ compensation?
Workers’ compensation is a form of insurance payment paid to employees if they are injured at work or become sick due to their employment. Payments may cover:
- wages while you can’t work
- medical expenses and rehabilitation costs
The injury or illness must be work-related to receive workers’ compensation benefits.
If you’re self-employed, a sole trader or an independent contractor, you may need to arrange your own workers’ compensation cover.
Protection at work
A report released by Safe Work Australia in 20231 showed:
- 5% of the working population experienced a work-related injury or illness in 2021-2022 (497,300 workers),
- Only 31% of workers received any form of workers’ compensation for their injury or illness.
Whilst workers’ compensation offers some level of protection, it still only protects you for injuries or illnesses that occur at work or as a direct result of work – and then any claim made must meet eligibility requirements. In Australia, entitlements and eligibility for payments vary from state to state. If you suffer from an injury or illness that does not qualify for a workers’ compensation payment, there’s a real possibility that you could be left without income and with large medical bills.
The best way to cover the gap
While workers’ compensation is beneficial, it may not provide enough financial support for you and your family, even if you have a successful claim.
Considering that the vast majority of Australians suffer from injuries and illnesses not related to work, relying on workers’ compensation alone may leave you short on financial protection.
So, how can you ensure you still have an income when you can’t work?
Income Protection
Income Protection goes to work when you can’t and can cover you for well beyond what worker’s compensation may provide.
- It replaces a percentage of your income if you suffer from any sickness or injury, both at work and outside of work
- It covers you for both temporary or permanent disability
- You’re covered 24/7, worldwide
- You can generally get cover if you’re an employee, contractor or self-employed
- Premiums can be tax-deductible to you subject to the ownership structure
- Policies can be tailored to meet your specific needs.
Although workers’ compensation might provide some coverage for injuries and illnesses sustained at work, including Income Protection in your personal protection plan can give you peace of mind, knowing that you’re covered in various situations, both at and outside of work. This way, your ability to earn an income will be secured.
If you want to explore your options for Income Protection, get in touch with your financial adviser today.
The information contained in this article is general information only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional. We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.
1 https://www.safeworkaustralia.gov.au “Analysis of ABS Work-related injuries survey data, 2021-22”