There is no doubt that income protection insurance plans are beneficial and better compared to other insurance plans such as workers compensation plans; however before buyers decide to purchase an income cover, it is important for them to understand how these financial protection plans work and how they are more beneficial than other plans.
Workers Compensation vs. Income Protection – 5 Facts
- Workers compensation insurance is mandatory which means that the law requires all employers to offer this type of financial protection plan to employees. Income insurance on the other hand is voluntary; which means that buyers who are willing to purchase these plans can choose a plan according to their needs and budget through their preferred insurer or insurance agent.
- Workers compensation insurance guarantees that the worker or employee will get an amount if he is injured while working during working hours however; this type of insurance does not ensure that the worker or employee will get maximum compensation payment for injuries sustained at work.
In addition; if the worker or employee is injured else where such as in a car while travelling back home from work, then workers compensation insurance will not offer the injured person a compensation payment. Income covers offer guaranteed compensation payments to employees, self-employed professionals and home makers if they are injured out of the work place, such as in a car while travelling back home from work. Depending on the plan opted for income covers will offer a reasonable compensations payment to maximum compensation payment for injuries sustained. People who opt for these covers can also be sure to get payouts if they suffer due to work or non-work related illnesses.The compensation payouts given to buyers will depend on the premiums and a few other factors such as the age, occupation of the buyer and the type of contract purchased however; buyers can expect to get maximum payouts that may total up to 75% of their pre-tax annual income.
- Workers compensation insurance usually offers 1 lump sum payment to the worker or employee provided he meets the various eligibility criteria. This payout will be determined based on the level of injuries, type of injuries and a few other factors. Income covers on the other hand, offer monthly payouts to the policy holder. Timely payments are given to ensure that the policy holder has enough money every month to run his household, pay bills or repay loans and mortgages. The eligibility criteria of income insurance plans are quite simple, for instance the policy holder should inform the insurer if he changes his job, gets a promotion, loses or quits his job, has knowledge of any pre-existing health conditions, is aware that he has any genetic conditions and not hiding any other important information from the insurer. The smoking status of the buyer will also determine the amount of premiums he will have to pay and the amount of payouts he will receive.
- Although workers compensation insurance is mandatory, this type of insurance plan does not offer any additional perks. In fact this type of insurance plan has limitations such as low compensation payments and stringent rules regarding filing claims. Income covers offer 3 or more benefits to buyers who opt for basic plans and premium plans. Generally the better the plan is, the more benefits will be offered. Many insurers allow buyers to choose additional benefits as per their requirement if they want to improve their policy and customize it.
- While the Australian Government is doing a noble thing by making workers compensation insurance mandatory, these plans take time to pay the compensation payment due to various reasons. However; since income covers are paid for by the buyer and are a form of personal life insurance plans; insurers try their level best to pay maximum claims within just a few days of the claims being filed. Claims that are correctly filled and supported with the right documents are usually accepted within 1 week of the filing date.
- To get help for workers compensation insurance, the worker or employee may have to spend a lot of time looking for the required information and the process for filing the claim can be troublesome as well. To get help for income protection insurance plans, buyers can visit an insurance agent’s website, call up an insurance agent or email an insurance agent. Insurers can also be contacted directly via the phone, email or in person. The process of filing claims for income covers has been simplified over the years and these days, people who want to file claims can do so instantaneously by either calling up the insurance agent or emailing the insurance agent. Some insurers may offer an option of filing online claims. Faxing claims may also be an option offered by some insurers.
Income protection plans work by offering policy holders guaranteed compensation payments when they cannot work due to loss of income. These guaranteed payments are given when claims are approved by the insurer and when policy holders meet the claims eligibility criteria.
Income covers offer a monthly payout to those policy holders who are affected by health problems such as but not limited to an injury or illness. Income covers ensure that families with young or old dependants do not have to constantly worry about bad times where they cannot earn a steady income to support their dependants. These plans can ensure that parents and children live a long and stress free life knowing that their younger children or older parents are well protected when the policy holder is unable to work for 2 weeks to a few years.
The longer benefit periods offered with most plans ensures maximum protection whereas the reasonably short waiting period offered with most plans keeps premiums low and ensures that the policy holder has enough time to understand his policy before he can file a claim for compensation payments from the insurer of his choice.