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Just because your employer is protecting you with worker's compensation cover, does not mean that you should disregard income protection insurance. There are many people out there who believe their worker's compensation is more than enough. Income protection is something you must instigate yourself, and is beyond what you are covered for with worker's compensation. A look at the issue.

• What is worker's compensation? Worker's compensation is compulsory coverage employers must provide for their employees in Australia. There is no consistency between the states. The amount of benefit and payout time will vary considerably depending on the state. All normally provide coverage for: income replacement, permanent impairment, death benefits and medical expenses. You may get one or more coverage for any single instance.

• What is income protection insurance? Just like life insurance, income protection insurance is something the individual initiates. Your own personal coverage will cover you for a number of situations depending on your policy. Income protection insurance covers you 24 hours a day, everyday. Worker's compensation only covers you for incidents that happen at work or are work-related. It is only income protection that will protect you if something happens out of your working hours.

• Claiming. Just because you are covered by worker's compensation, does not mean you cannot claim on your personal coverage. They are two separate policies. This is something that you should discuss with your insurance professional. Most income protection insurance will enable you to cover yourself for much higher and much longer terms than the standard ' compensation. Claims against personal coverage are more likely to be dealt with faster. The amounts awarded in each state for any particular claim, are based on what law has been decided for that state. You have a personal choice on the amount you want to cover yourself for with personal coverage.

• The biggest difference. It is crucial to remember that worker's compensation will only cover you for incidents that occur in relation to your work. There are many more opportunities for something to go wrong in your life outside of your work. Being without income and having a huge array of medical bills can destroy everything that you have built up.
• Tax Advantages. In most cases, income protection insurance affords some form of tax deductible benefit. It is in the interest of our government to encourage Australians to have their income protection and other insurances in the event of misfortune. This eases the burden on the country's welfare and health systems.

As our lives are built around the need for credit, it is essential for everyone to have income protection insurance. Bundle this insurance in with your other policies where possible. Always go with professionals in the field. Competition is fierce, and so it should not be difficult to find the policy that is right for you. And finally, always read your policy carefully.

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