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Workers Compensation vs. Income Protection Insurance

Many people often confuse workers compensation for income protection insurance due to some similarities between these 2 types of insurance plans. The following paragraphs will help you understand which type of insurance plan is better for you and the difference between these two types of insurance schemes.


Worker’s compensation

Worker’s compensation insurance ensures that workers get a compensation amount when they are seriously injured due to negligence of the employer. In this type of insurance, once the employee gets the compensation amount he loses the right to sue the employer for negligence. Worker’s compensation insurance has many limitations since this type of insurance only protects employees in certain scenarios such as employer’s negligence. Another limitation of this type of coverage is that the compensation amount offered to employees is usually not adequate to cover serious injuries.


Income protection insurance

Income protection insurance protect people from the disadvantages of unemployment when they cannot work due to sickness or injury. People who opt for this type of insurance receive a monthly payment after they file a claim and they also get additional benefits such as a death benefit and day one claim benefit. Insurance companies offer income protection plans to people who work in both low risk jobs and high risk jobs.


Benefits of income protection

The main benefit of income protection plans is that, buyers can insure up to 75% of their income and after filing a claim they will receive regular monthly payments for a fixed period of time. The other benefit of this type of insurance is that policy holders only have to wait for a few days before getting their first payment and this waiting period can be decided by policy holders themselves. Since income protection covers can be customized, buyers can also choose the type of insurance plan they want depending on their own requirements. Buyers should note that they not only have the option to choose the waiting period but they also have the option to choose between indemnity contracts and value agreement contracts. Indemnity contracts are a little cheaper than value agreement contracts since indemnity contracts have certain limitations.

It is important to remember that in addition to having worker’s compensation insurance, people who want to protect their future and families can opt for income protection insurance voluntarily. Good income protection policies cost only 2-3% of the policy holder’s annual income and offer all the benefits mentioned above. In addition, buyers who opt for short term policies can save on premiums by opting for stepped premiums and buyers who opt for long term policies can benefit by opting for leveled premiums.


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