Why Take Out Life Insurance if I Have WorkCover?

Life Insurance is Important Even if You are Protected Under WorkCover

WorkCover is a statutory scheme provided to employees in Australia, which is why most employees can receive money through workcover should they happen to get injured at their workplace, or contract a serious illness as a direct result of their job. Workcover does not cost anything to an employee as all the required premiums are paid by the employer. Under workcover, employees may get various types of medical benefits, disability benefits, as well as death benefits if the accident results in the death of the employee. Therefore, employees who are protected by workcover often believe that it takes care of all their insurance needs and that they do not need to waste money by purchasing separate life insurance.

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Rates last updated December 4th, 2016
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However, nothing could be further from the truth. This misconception, that life insurance is a waste when you are covered by workcover, exists because most people are not aware of the benefits that life insurance has over workcover. This article talks about all those reasons why a person should take out life insurance even if they have worker’s compensation cover.

Differences Between Life Insurance and WorkCover

The following reasons will help you to understand why workcover is not adequate protection and why life insurance is a must.

  • WorkCover does not protect against injuries sustained outside of work: This is one of the main restrictions of workcover that does not apply to life insurance. If you get injured while you are away from work, you cannot claim workcover. Similarly, if you contract a serious illness that has nothing to do with your occupation, then again you do not qualify for workcover. Therefore, considering that almost 75% of all injuries are sustained outside of work, it becomes absolutely essential to have some kind of protection that covers you in such circumstances. This is where life insurance that includes disability cover and income protection cover can be so useful. With such a life insurance policy in place, you will be compensated regardless of where your injury occurred and whether or not your illness was a direct consequence of your job.
  • Ambiguity of benefits under workcover: The laws that govern worker’s compensation differ from state to state in Australia. Hence, you may be eligible for medical benefits, disability cover, as well as loss of income in a particular state, but may be able to claim only medical expenses in another. This leads to a lot of ambiguity with regards to the benefits that a person receives should they be eligible for a valid claim under workcover. Hence, it becomes extremely difficult to predict how much money you will get through the workcover, and whether or not it will be enough to cover all your needs. On the other hand, if you have a life insurance policy that includes trauma cover, then you will know exactly how much money you stand to get should you be injured and become unable to work. You can take out a life and trauma insurance policy depending on your income, your budget, as well as your individual needs in terms of insurance cover. There will be no ambiguity I this type of insurance, which is indeed the right way to protect yourself and your family from unforeseen circumstances.
  • No cover for expenses unrelated to the injury: If you do sustain an injury that is eligible for workcover, then you stand to get only those expenses which are related to the injury. This means that you may get enough money to pay off all your hospital bills and perhaps to cover your loss of income for a while. However, if you have unrelated ongoing expenses such as a home mortgage, personal loans, or even loans that you have taken for the education of your kids, then none of these expenses will be covered under the workcover. However, if you take out a life insurance policy with an added income protection plan or trauma cover, then the policy will cover all these expenses too, and the benefits from such a policy will protect you completely in case you are injured and cannot continue to work. The money from the life insurance policy will not only help you to get back on your feet, but will help you to take care of all your financial responsibilities while you are recuperating.
  • It’s easier to get life insurance benefits that workcover benefits: Since there are various eligibility factors that determine a valid workcover claim, it is often seen that claims for worker’s compensation take a very long time to be processed. In many cases you may not get any compensation at all. However, benefits under life insurance policies are much easier to claim as they do not have as many restrictions as worker’s compensation cover.

Therefore, for all these various reasons listed above, it becomes absolutely essential to take out a separate life insurance policy even if your company provides you with workcover. After all, your entire life does not revolve around your work, which is why your insurance cover should not be tied solely to your work either.

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William Eve

Will is a personal finance writer for finder.com.au specialising in content on insurance. While he cannot give personal advice to clients, Will enjoys explaining the intricacies of different types of protective cover to help individuals and businesses find affordable cover that won't leave them underinsured.

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