Manual labourers face many risks at work. Find out how to get the income protection cover you need.
Manual labourers are more likely to suffer physical injury than most workers. That's why manual labourers should consider income protection insurance. This form of insurance:
- Pays a monthly benefit if you suffer an illness or injury and are unable to work.
- Lets you cover debts, living costs and other expenses while you're unable to earn an income.
Keep reading to find out how manual labourers can get the most out of income protection insurance.
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What risks do manual labourers face at work?
According to Safe Work Australia’s 2015 report on work-related injuries and fatalities, manual labourers see a significant number of fatalities and injuries relative to most other occupations. Some of the most striking statistics are listed below.
How are manual labour occupations classified by life insurance companies?
Insurers classify manual occupations based on the nature of the work and the dangers involved. While every insurer has slightly different conditions here are some general guidelines:
|Labourer jobs||Insurance classification||Impact on insurance policy|
|Wharf labourer, builder's labourer, brewery labourer, gardener||High risk|
|Railway worker - labourer,|
Farm labourer (depending on the type of farm/labour)
|Builder (qualified), boat builder||Manual worker|
If you are deemed to have an occupation with a medium to high level of risk, insurers may impose conditions on your income protection cover. These can include:
- Premium loading. A higher than normal premium which is typically applied in the form of a set price increase per $1,000 of cover. The higher your perceived level of risk, the higher the loading will be.
- Exclusions. If you represent a high risk to an insurer, but not to the point of being uninsurable, they may offer you cover which excludes certain specified events.
- Restricted products. If you are high risk but still insurable in some ways, an insurer may offer you some products but not others (i.e. they may offer TPD insurance but not income protection insurance).
- Refusal of cover. If your occupation is extremely high risk and you are deemed uninsurable (i.e. bomb disposal expert, test pilot etc), you will need to look for an insurer who specialises in high risk insurance.
What other types of insurance should manual labourers consider?
Apart from income protection there are a few other policy types that are worth considering for manual labourers. This includes:
- Life Insurance. Provides a lump sum benefit in the event the insured person passes away or is diagnosed with a terminal illness and not expected to live for a period longer than 12 months.
- Total and Permanent Disability Insurance. Pays a lump sum benefit if the worker suffers a total and permanent disablement as defined by their policy. Your policy may also include partial disability, where the worker is provided a benefit if they are unable to perform their occupation at the same level as before.
- Accidental Death Insurance. Provides cover for death caused by accident only.
- Personal Accident Insurance. Get cover for injury caused by accident only.
- Funeral insurance. You receive a lump-sum benefit, usually to a maximum of $30,000 to cover the immediate costs of a funeral. The cost of these different types of cover will vary greatly and reflect the level of cover that they provide.
How much should manual labourers spend on income protection insurance?
Your premiums costs depend on your income and the type of manual labour you perform. The following chart has some examples of quotes taken from finder's insurance comparison engine, which should give you some idea of costs.
*These are example quotes only based on a 35-year-old male gardener living in NSW who doesn't smoke. Your actual quotes may vary. Quotes are accurate for June 2017.
How can I compare income protection policies for manual labourers?
When shopping around for income protection insurance policies you should always consider your own needs and circumstances. You should ask yourself these questions:
- What are my family circumstances? If you have a partner who doesn't work and several young children your insurance needs will be very different from a single person's needs.
- What is my financial situation? You need to calculate how long your family could survive without your income if you were injured and unable to work. This helps you determine the appropriate cover for your situation.
- What is my employment situation? Your income affects the type of policy you select. Do you have a stable, fixed income, or is the nature of your work irregular?
What income protection policy features should I look at?
When shopping for income protection as a manual labourer, you should look for and compare the following policy features:
- Own occupation cover. This option covers you if you are unable to work in your current occupation due to illness or injury, as opposed to any occupation cover, which may see your claim denied on the grounds you are eligible to work in some other (often lesser paid) occupation.
- Agreed vs indemnity value. If you are a self-employed worker and your income fluctuates, consider agreed value cover. This lets you set your monthly benefits at a level of your choosing. If you are an employee with a regular, stable salary, consider the less expensive indemnity value cover, which fixes your monthly benefits to your income at the time of a claim. Learn more about the differences between the two.
- Stepped vs level premiums. If you are a young worker on a limited income, consider stepped premiums (premiums which start low and increase over the years), or if envisaging a long career, consider level premiums (more expensive, but remain the same and become more affordable as your salary increases). Read more about stepped and level premiums.
- Waiting period. The longer you opt to wait for a benefit, the cheaper your premium will be, but the waiting period you choose depends on whether you are likely to have other sources of income to tide you over such as sick pay, holiday pay and savings.
- Benefit period. The shorter the period you opt to receive a benefit, the cheaper your premiums, but this depends on how long you think it would take you to recover and return to work after an accident or illness.