Income Protection Insurance Versus Workers Compensation

It's a question that gets asked quite a bit, why would I need to pay for income protection insurance when I'm covered by workers comp?

Consider this

Only 25% of all injuries are sustained at work

The other 75% are as follows (just for personal interest):

27% undertaking leisure activities

11% playing sport

37% at home

So in 3 out of 4 cases, people who had time off work as a result of an injury were not eligible for workers compensation as the injury didn't happen at work

Of the 25% who were injured at work. Almost 700,000 people were injured at work and only 216,000 received workers compensation benefits. (Source ABS 2003 "Work Related Injuries" Comminsure 208)

Similarly if you have time off work due to a medical illness, such as Stroke, Cancer, Depression or Chronic Back Problems chances are you won't be eligible for Workers Comp; If you are self employed, you may not be covered by workers compensation at all

Workers Compensation does have its place and it does provide protection in number of areas if you are eligible for a claim:

Weekly Income Benefit

Income Protection Insurance Versus Workers Compensation

Lump sum benefit on Death or Permanent Disability

Medical Expenses (with capped limits)

So as an employee, workers comp does provide some safety net if you are injured at work which is a good thing.

You ability to earn an income over your lifetime is your biggest asset. Depending on how you calculate it if you earn $50,000 per annum over your working life that's a total of over $2,000,000! If you are going to pay say $70 a month to insure your car, you would have to be crazy not to invest at least the same in insuring you have a solid income for life.