WorkCover vs Income Protection: Why it's important to know the difference
When you're unable to work due to injury or illness, the last thing you want to be doing is trying to figure out where your financial support is going to come from. That's why understanding the difference between WorkCover and Income Protection insurance is so important.
Both types of cover can offer critical financial relief when you're off work, but they work in very different ways, and in many cases, you may actually be entitled to claim under both.
What is WorkCover?
WorkCover (or workers compensation) is a statutory scheme designed to protect employees who are injured or become ill as a result of their work. Every employer is required by law to have it.
If you're injured at work, or if your condition has been caused or worsened by your work, even if the diagnosis came after the fact, you may be eligible to lodge a WorkCover claim.
WorkCover provides more than just wage replacement. Depending on your circumstances, it may cover:
- Medical and treatment expenses
- Hospital and rehabilitation costs
- Emergency ambulance services
- Support with return-to-work plans, including suitable duties offered by your employer
- Lump sum compensation for permanent impairment or disability
- Weekly income payments (though these are often a percentage of your usual wage and may reduce over time)
Read: [How to control Workers' Compensation premiums]
What is Income Protection?
Income Protection insurance provides a safety net when you're off work due to injury or illness, regardless of whether it happened at work. These policies are often arranged by your employer, union, or industry group.
Depending on your policy, Income Protection can replace up to 100% of your regular income, including overtime and allowances. Payments usually begin after a short waiting period and have a limited duration, usually of 24 months. Income Protection helps you manage everyday expenses and reduce financial stress while you focus on your recovery.
Depending on your policy, Income Protection can also provide cover for the following:
- Return to work benefit
- Homemaker assistance benefit
- Rehabilitation benefit
- Mental health benefit
- Death expenses benefit
- Death benefit
Read: [Why Income Protection matters in the workplace]
Why Income Protection isn't a replacement for WorkCover
Income Protection is designed to support you financially if you can't work due to injury or illness outside of the workplace, for example, if you were involved in a serious car accident or received a cancer diagnosis, but it doesn't replace the protections provided by WorkCover. While some Income Protection policies include benefits such as rehabilitation support or a return-to-work benefit, these are generally limited, often capped to a set amount or timeframe, and not always included in every policy.
WorkCover, on the other hand, provides comprehensive medical and rehabilitation coverage, requires employers to offer suitable duties and support your return to work, and includes broader entitlements such as ongoing treatment costs, travel expenses for medical appointments, and even workplace modifications if needed. For work-related injuries or illnesses, it's important to lodge a WorkCover claim first to ensure you receive the full range of support you're entitled to.
How Income Protection and WorkCover can work together
While WorkCover provides essential support for work-related injuries, its weekly payments often don't cover your full pre-injury wage and in many cases, those payments reduce further after a set period. Income Protection can step in to bridge that gap. By topping up reduced WorkCover payments, it can bring your income back closer to what you normally earn. This kind of dual support can be incredibly helpful in maintaining financial stability while you recover.
Read: [Attracting top talent with Group Income Protection]
Want to know more about Income Protection?
Understanding how Income Protection works alongside WorkCover can give you greater peace of mind if the unexpected happens. Visit our Group Income Protection page to learn more about your options or request a quote online and one of our specialists will be in touch.
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