Personal accident and sickness insurance and income protection are great future investments if you are a business owner. Both policies protect you if you’re temporarily unfit to work. However, there are several differences between the two insurance policies.
To avoid confusion and discrepancies on your insurance claim, let’s go over all the key features of these insurance policies.
What is Personal Accident and Sickness Insurance?
Personal accident and sickness insurance covers you financially when you cannot work because of accidents, illnesses or both. You can either receive a lump sum payment or monthly benefit, depending on your policy or insurance provider. This cover can be beneficial for all workers or labourers, including sole traders, operators, contractors and self-employees.
What is Included in Personal Accident and Sickness Insurance?
The coverage of your policy may vary depending on your selected package. Be sure to check your cover and consult your insurance provider to avoid problems in the future. To give you an idea, here’s what is usually included in the personal accident and sickness insurance:
Accidental Injuries
The policy covers any accidental injury, including permanent total disablement and specified permanent total loss. Depending on your policy, it may also include coma benefit, home renovation and rehabilitation expenses.
Weekly Injury Benefits
Your insurance provider may cover your weekly loss income due to temporary partial disablement or temporary total disablement.
Weekly Illness Benefits
The policy may also cover your weekly income if you’re unable to work because of illness resulting in temporary or total disablement.
Additional Benefits
Many reputable insurance providers in Australia offer customisable premium plans that can provide more comprehensive coverage. Some of these add-ons are spouse and dependent children, accidental death, funeral expenses, tuition or advice expenses and accidental HIV infection.
What is Income Protection?
Income protection covers your income if you cannot work because of illnesses or injuries.In this policy, you usually get a monthly benefit until you can fully recover and return to work. This type of insurance can benefit all workers and labourers. Many self-employed or small business owners today also benefit from this type of insurance cover.
What is Included in Income Protection?
Depending on your policy or insurance provider, income protection insurance usually covers 75% of your income. Some premium policies can also cover up to 90% of your income.
Keep in mind that this policy has a waiting period for your insurance claim. Some insurance companies also offer waiting period options (30 days, 60 days and 90 days). Here are other policy options for income protection:
Increasing Claims
This policy option can increase your monthly benefit, depending on your preference. You can select from increasing your claim based on the annual Consumer Price Index (CPI) or by a predetermined percentage as stated in your PDS. This option is only recommended for insurance plans with a benefit period longer than two years.
Bed Confinement
This add-on can provide you with additional payment benefits if you need bed rest or bed confinement because of illness or injury.
Total Disablement
You can also include total disablement in your policy for an additional monthly benefit. Be sure to check the terms of your policy to avoid future problems with your claim. For instance, you can only claim this option if you cannot perform at least two of these daily activities:
– Eating
– Personal hygiene (showering or bathing)
– Using the toilet
– Moving in and out of the bed
Personal Accident and Sickness Insurance & Income protection
Now. let’s talk about the key differences between the two insurance policies:
Payment Terms
With personal accident insurance, you usually get one lump sum payment. You get monthly installments with income protection insurance.
Coverage
Personal accident and sickness insurance only cover accidental injuries or illnesses. Income protection usually covers almost all injuries and illnesses.
Coverage Period
Personal accident and sickness insurance can cover you up to 5 years. On the other hand, income protection’s coverage period can pay you until you’re 65.
Cancellation Policy
Insurance providers can cancel personal accident insurance. Income protection cannot be canceled as long as you can continue paying for it.
What it can Cover
Both policies can cover your daily expenses, such as school fees, groceries, mortgage repayments and others.
Application Process
Unlike income protection insurance, personal accident insurance may not require medical tests to take out a policy.
What to Consider When Getting an Insurance Policy
Getting an insurance policy is a smart investment. It protects you and your family from loss of income. However, there are several things to consider when getting an insurance policy. Here are some of them:
1. Choose Reputable Insurance Brokers.
Be sure to check the credentials of your insurance provider. Check the client ratings and read reviews about their services. You should also consider their length in service and financial strength. This should help you gauge the quality of their services.
2. Be Honest about your Medical History.
It is imperative to be honest about your health history. Be sure to disclose everything to avoid problems or discrepancies in the future. You may not get any payout if the insurer finds out that you didn’t provide accurate details about your medical history.
3. Select the Policy you can Afford.
You don’t always need to choose the most expensive premium. Just select the policy that suits you or you can afford. A reputable insurance broker should discuss your policy options and choose the best one that suits your needs and budget.
4. Read Everything!
Be sure to read your policy or any documents before signing them. It is important that you understand the coverage of your policy. If you have questions, do not hesitate to ask the broker.
5. Stay Updated.
The policy can change over time. Be sure to review your policy regularly. Talk to your broker or contact your insurance provider to ensure you’re updated with any changes in your policy.
6. Compare Policies
It is also ideal to compare policies from different insurance providers. In addition to regular coverage, consider checking the premiums they offer as well.
Conclusion
Personal accident and sickness insurance and income protection insurance are both designed to help you financially if you’re not fit to work.If you’re looking for a more affordable payment option, getting personal accident and sickness insurance might be the best option for you.
On the other hand, If you’re in a high-risk workplace environment, it’s best to choose income protection because it has broader coverage. Your insurance provider should help determine the best policy for you.