Sickness Insurance

What is sickness insurance in Australia?

“Sickness Insurance” is quite a general term that may be used to describe a number of different types of personal insurance policies available in Australia. This can include:

  • Income Protection Insurance: Provides an ongoing benefit of 75% of the insured’s monthly income while they unable to work due to serious illness or injury.
  • Trauma Insurance: Provides a lump-sum benefit in the event the insured suffers a medical condition that is covered under their policy. This lump-sum benefit can be spent by the insured as they seem fit to cover anything from medical expenses to day-to-day living expenses.
  • Total and Permanent Disablement: Provides a lump-sum benefit if the insured person becomes totally and permanently disabled due to illness and no longer able to work.
  • Sickness and Accident Insurance: This is a type of standalone cover that pays out in the event of injury or illness.

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Coverage is the amount of money that you will be paid in the event of a claim. An insurance consultant can help you determine an appropriate amount. Calculator
Provides a lump sum payment if you become totally and permanently disabled and are unable to return to work.
Provides a lump sum payment if you suffer a serious medical condition. Cover can be taken out for 40-60 medical conditions depending on the policy you choose.
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Do I need sickness insurance cover if I have health insurance?

Sickness insurance can have a different meaning in different countries. Many developed countries today have a universal health insurance scheme of some description that is usually operated by its government. These schemes insure the country’s population against excessive medical bills should you become sick or injured. It usually includes hospital costs as well as doctor and surgical expenses.

Sickness insurance is designed to cover other types ongoing costs

Sickness cover provides either a lump sum or income protection that covers things such as

  • Extra medical and rehab costs not covered by your health insurance
  • Living expenses while you can't work
  • Modifications to your lifestyle expenses e.g. if you need a wheel chair

Won’t my employer already provide me with cover for sickness?

While most work contracts have a period in which the employer will continue to pay his or her employee while unable to attend work, these periods eventually expire and if you remain incapacitated you stand to lose your ability to earn an income. Most workers are only provided with 2-3 weeks paid sick leave each year.

Extended periods of time can be covered by sickness insurance

In the event that the person suffers a serious illness that forces them out of work for an extended period of time, this short period of cover is not going to be sufficient for them to cover their ongoing living expenses. Different types of personal insurance can ensure the person receives an adequate benefit payment, either as an ongoing monthly benefit or as a lump-sum benefit.


Can you take out sickness insurance if you are over 60?

Different types of insurance will generally have different age limits in place for taking out cover. The table below shows the general age limits for different types of cover available in Australia. It is worth noting that some insurers may still be able to provide the applicant with cover but may apply a premium loading or place certain exclusions on the policy.

Type of CoverMaximum entry age (may vary depending on provider)Maximum expiry age (may vary depending on provider)
Income Protection Insurance60-6565-75
Trauma Insurance60-6565-70
TPD Insurance60-6590-100
Sickness and Accident Insurance55-6060-65
Mortgage Protection5965

As noted previously, the age limits above may not be the same for every provider. It is always worth checking the product disclosure statement prior to application to assess exactly what age you are covered to.


How is Accident and Sickness Insurance different to Income Protection Insurance?

There are a number of key differences between Accident and Sickness Insurance that may influence your decision on what type of cover is most suitable for your situation.

Cancellation of cover

    • Personal sickness and accident insurance: In the event that the insured’s level of risk increases due to changes in their occupation or lifestyle, the insurance company is completely within their rights to cancel the policy or increase the policy premiums at the time of renewal.
    • Income protection insurance: Most income protection insurance policies are guaranteed renewable, ensuring the provider is unable to increase the policy premiums or cancel the policy based on the insured’s personal characteristics. This condition stands regardless of any previous claims made on the policy or if there have been any chances to the insured’s health or occupation.

Payment of Benefit

      • Personal sickness and accident insurance: The majority of personal sickness and accident insurance policy are indemnity value. This means that benefit payments are generally subject to change based on the insured persons income over the past 12 months.
      • Income protection insurance: Income protection insurance policies can generally be either indemnity or agreed value. This means that the insured person can determine the benefit to be paid at the time of application.

Benefit period

  • Personal sickness and accident insurance: Most policies will only provide cover for a benefit payment for a period of 2 or 5 years.
  • Income protection insurance: Applicants have the option of selecting a whole range of benefit periods from 2 years, 5 years or to age 65.

Range of benefits and exclusions

      • Personal sickness and accident insurance policies are generally quite limiting in the range of additional benefits that are available to applicants. Policies also contain far more exclusions for when a benefit can be paid than income protection cover. Personal accident insurance policies are generally much more affordable due to the reduced level of cover and increased exclusions for benefit payments to that of income protection.

Is sickness insurance available for self-employed workers?

Each of the different types of sickness insurance are available to self-employed workers in Australia. While self-employed workers may be required to pay an additional premium to non self-employed workers, they will still be provided with the same comprehensive cover.

Why is sickness insurance so important for self-employed workers?

As self-employed workers are not given any additional fringe benefits from their employer in the event of serious illness or injury, the benefit of having insurance in place is even more obvious. While people employed by larger organisations may be provided with income cover under a group policy or other benefits such as sick leave or annual leave, a self-employed worker will be forced to rely on what savings they have to avoid falling into debt.

What expenses can sickness insurance be used for?

The benefit payment from a sickness insurance policy may not only be used to cover daily living expenses and outstanding debt but also the ongoing expenses that may be incurred through their business while they are unable to work such as;

      • Staff wages
      • Equipment hire
      • Vehicle hire
      • Rent of premises
      • Cost of a replacement worker

Discover more of the benefits of income protection cover


Compare sickness insurance policies with an insurance consultant

With so many different types of sickness insurance policies available from both life insurance providers and general insurers, finding the best option for your cover requirements and budget can be overwhelming at times. An insurance consultant can help you compare the different options available to help you find an option that is affordable and not leave you underinsured. By making an enquiry with a consultant, you can gain access to premium discounts as high as 25% and sickness insurance with free child cover.

Compare Sickness Insurance Policies with Australian Insurers

Please enter your full name
Please enter a valid email address
It's important to give us a valid phone number
Gender
Smoker
Date of Birth
Coverage is the amount of money that you will be paid in the event of a claim. An insurance consultant can help you determine an appropriate amount. Calculator
Provides a lump sum payment if you become totally and permanently disabled and are unable to return to work.
Provides a lump sum payment if you suffer a serious medical condition. Cover can be taken out for 40-60 medical conditions depending on the policy you choose.
By submitting this form, you agree to the finder.com.au privacy policy
Compare Quotes

Richard Laycock

Richard is the senior insurance writer at finder.com.au and is on a mission to make insurance easier to understand.

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2 Responses to Sickness Insurance

  1. Default Gravatar
    Andrew | September 22, 2016

    Small non for profit sporting group is hiring our venue. they need accident & sickness insurance, to allow them to hire under our requirements. Can they purchase short term policy? how much will policy cost?

    • Staff
      Maurice | September 23, 2016

      Hi Andrew,

      Thanks for your comment.

      While it’s possible to get short-term sickness insurance, the exact length of cover and price will vary from insurer to insurer. It’s a good idea to get in touch with an adviser for specific recommendation.

      I hope this helps,

      Maurice

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