Comparing Workers Compensation And Income Protection
Your ability to earn income on a consistent basis is a very valuable asset to have. This is clearly shown in an estimation done in 2011 by Australia’s Bureau of Labor Statistics that estimated the total lifetime earnings of an individual to be approximately $2.7 million. This was based on 40 years of continuous employment at full-time average weekly earnings. That is why it is so critical that your income earning potential be secured. For more information you can visit Me Covered income protection insurance site today!
There are two main options that are available where your future earnings can be secured: worker’s compensation and income protection insurance. Many employers provide their employees with worker’s compensation (or work cover). However, this cover might not be sufficient for covering all the special needs that you might have. There are certain limitations that work cover has that makes it very inadequate for really making your earning capacity secure. Therefore, if you want to have more financial security, you should check into income protection insurance, which will provide you with an extra level of cover.
Comparing Work Cover And Income Protection Insurance
The major difference between work cover and income protection insurance is clearly evident when comparing each option’s basic definition:
(i) Income protection cover provides a continuous payment that is a percentage of your former salary (over a predetermined period of time), in the event you are unable to work due to different factors, including injury and illness. The individual doesn’t need to be an employee. The cover is for self-employed individuals as well.
(ii) Work cover applies to employees only who are injured at work and a result can no longer work. In this situation, worker’s compensation is provided by the employer for the period of time that the individual will be incapacitated.
There are other aspects as well that clearly differentiate income protection insurance from work cover:
The Need To Prove The Employer’s Negligence
Even though you are an employee that has worker’s compensation cover provided by your employer, it is still very unlikely that you will be compensated if your injury is not caused by your employer’s negligence. If a serious long-term illness incapacitates you, but the illness is not caused by your employer being negligent, you wouldn’t be eligible to receive workers compensation payments. This aspect is very critical to consider, particularly since issues related to health are the third major cause of working-age Australians not being able to participate in the work force (NATSEM’s Income and Wealth Report).
Income protection cover, fortunately, doesn’t consider employer negligence when it makes benefit payments. Therefore, the income protection cover would make payments to the employee.
Workers compensation basically makes benefit payments for accidents and injuries that occur at your place of work. However, findings from the Australian Bureau Of Statistics reveal that many more injuries and accidents occur outside of the workplace: 25% are work-related injuries and 75% of accidents take place during recreational activities or at home. Therefore, if you got injured away from the workplace, your work cover wouldn’t be sufficient to secure your financial future. It is necessary to have additional income protection to protect yourself from something like that occurring.
Another potential cause for concern regarding work cover is that there is a possibility that you won’t receive financial assistance even in the event that an injury does occur in the workplace. The Australian Bureau of Statistics issued a Work-Related Injuries Report that showed that only 36% of individuals who experienced workplace related injuries or illness from July 2009 through June 2010 received their workers cover benefits. Additional income protection is obviously necessary to ensure your future financial security.