Ask Janne: Please advise on Income Protection Insurance


Hi Janne, a friend of mine recently had a car accident.

He was in intensive care for some time and has now returned home. A family member has moved in to care for him and it will be some time before he can return to work, if ever.

He is unlikely to be paid by workers’ compensation because the accident was caused by a medical problem (he lost consciousness first, and then had the accident).

Is there any advice I could pass onto him? He is now not only in trouble physically, but also financially.

Kind regards, Andrew



Hi Andrew, thank you for your email.

I do understand (from personal experience) the trauma of having an accident and at the same time losing your income.

As I do not advise on worker’s compensation, I cannot assist you in that area. Your friend will need to see a lawyer who specialises in worker’s compensation.

Firstly, it would be also important to check whether he had income protection. This is often provided as part of superannuation, and in this case, many people are not even aware they have it. It doesn’t become relevant until something like this happens.

Of course, income protection can be also personally held outside superannuation. In that case, he would know if he had it (unless he had a serious head injury) as he would be paying the premiums.

Most income protection insurance policies do not discriminate between accident and sickness, as they pay the same amount regardless of the cause. As long as it is covered by the policy, then it will pay.

The standard exclusions on income protection policies (including self-inflicted injury, war, riot, terrorism and pregnancy) would not apply to his accident. The only possible exclusion would be if he had, for example, a history of fainting and that had been excluded from his policy.

It’s important to note here that worker’s compensation does not provide adequate cover for most people. Income protection provides the most comprehensive cover and is available to most people unless they already have poor health or if they have a high-risk job.

If his disabilities are permanent, he may be able to claim for total and permanent disability. This may be available from an insurance policy (held inside or outside superannuation) or from his superannuation itself.

An insurance policy will have a sum insured that is paid as a lump sum. For example, he may have $1,000,000 cover. If he can prove he is totally and permanently disabled, then he will be paid $1,000,000.

There are two different definitions, and if his policy is inside superannuation, he will have to prove he is totally and permanently disabled from any occupation. If held personally, he may only need to prove he cannot do his own occupation.

The other thing he may be able to do is withdraw his superannuation, or have it pay a pension to him, if he can no longer work again in any occupation.

All this is complex and difficult, especially if he is not well. It is imperative that he (or a family member on his behalf) seeks professional advice on his options. Please ask him to contact his financial planner, or alternatively call me on 9452 7871.

Regards, Janne


Plan Protect Financial Planners for the Northern Beaches and North Shore

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