21 Mar 2024 | Blog

Is worker’s compensation sufficient?


Regardless of one’s occupation, there’s always an inherent risk of falling ill or sustaining an injury, no matter the nature of the job. Consequently, it is a statutory obligation for all Australian workplaces to ensure a safe working environment, assess potential hazards, and maintain worker’s compensation insurance.

What Constitutes Worker’s Compensation?

Worker’s compensation refers to insurance benefits provided to employees who suffer injuries or illnesses directly related to their job. This insurance can cover:

  • Lost wages during the period of incapacity
  • Expenses related to medical treatments and rehabilitation

To qualify for worker’s compensation, the illness or injury must be directly connected to the employee’s work activities.

Safety in the Workplace

According to a 2023 Safe Work Australia report:

  • 5% of the workforce experienced a work-related injury or illness in the 2021-2022 period (representing 497,300 individuals).
  • Merely 31% of these workers received any form of worker’s compensation for their afflictions.

While worker’s compensation provides a safety net, it specifically covers incidents that occur in the workplace or as a direct consequence of employment, subject to certain eligibility criteria. The terms and conditions for receiving these benefits can vary across different states in Australia.

For injuries or illnesses that fall outside the scope of worker’s compensation, individuals may face the risk of being without income, which can severely impact their ability to cover living and medical expenses.

(A crucial note for self-employed individuals, sole traders, or independent contractors is that they may not be eligible for worker’s compensation and should arrange their own coverage.)

Bridging the Coverage Gap

Worker’s compensation, although helpful, might not suffice to support you and your family financially in every situation, especially considering that a significant portion of injuries and illnesses do not stem from workplace activities.

To ensure comprehensive coverage, consider the role of Income Protection. This type of insurance activates when you are unable to work, extending protection far beyond the limitations of worker’s compensation by:

  • Replacing your income for illnesses or injuries incurred both on and off the job
  • Offering coverage for both temporary and permanent disabilities
  • Providing 24/7 worldwide protection
  • Being available to employees, contractors, and self-employed individuals
  • Allowing for tax-deductible premiums
  • Offering customizable policies to suit individual requirements

Incorporating Income Protection into your financial safety net enhances your security, safeguarding your earning capability across a broad range of scenarios, not just those related to your employment. For peace of mind and comprehensive coverage, adding Income Protection to your financial plan is advisable.

To explore Income Protection options further, contacting your financial adviser is a wise next step.

The information contained on this website has been provided as general advice only. The contents have been prepared without taking account of your personal objectives, financial situation or needs. You should, before you make any decision regarding any information, strategies or products mentioned on this website, consult your own financial adviser to consider whether that is appropriate having regard to your own objectives, financial situation and needs.

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