No matter what kind of job you have, there is always a possibility of falling sick or getting injured, regardless of the type of work you do.
That's why every Australian workplace has a health and safety obligation to provide a safe work premises, assess risk and have workers compensation insurance.
What is worker's compensation?
Worker's 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 worker's compensation benefits.
Protection at work
A report released by Safe Work Australia in 2023 showed:
3.5% 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 worker's 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. Entitlements and eligibility for payments vary from state to state in Australia.
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 to support yourself and pay for the costs of the medical condition.
(An important side note - If you're self-employed, a sole trader or an independent contractor, you may not be covered under any worker's compensation scheme, in which case you will need to organise your own protection.)
The best way to cover the gap
While worker's 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 worker's compensation alone may leave you short on financial protection.
So, how can you ensure you have the best safety to protect yourself 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 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 are generally tax-deductible
Policies can be tailored to meet your specific needs
Although worker's 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.
I hope you found this article beneficial. I’m Mo Shouman, a financial adviser with 20 years of experience helping professionals save on tax and grow their wealth. Book your financial clarity meeting below and discover how you can take your finances to the next level. I’m proud to be the only adviser who provides a detailed assessment of your financial position—whether you decide to work with me or not!