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• What is personal accident and illness insurance?
• What does personal accident and illness insurance cover?
• What doesn’t personal accident and illness insurance cover?
• Why would I want personal accident and illness insurance?
• What’s the difference between personal accident and illness insurance and income protection insurance?
• Can business owners claim personal accident and illness insurance as a tax deduction?
• How do I choose a personal accident and illness insurance plan?
• Where can I compare personal accident and illness insurance?

Long story short

Personal accident and illness helps cover loss of income due to accidental injury or illness

You may receive a weekly benefit, say up to 85% of your income, while you’re on the mend and can’t work.

Cover applies whether the incident happens when you’re at work or off the clock

Some cover options extend to rehab costs, business expenses, or lump sum benefits for accidental death or permanent disability.

Personal accident and illness is usually easier to get and cheaper

However, it can only offer fixed benefits and shorter periods of cover.

What is personal accident and illness insurance?

Personal accident and illness insurance is a type of business insurance that can provide you with a weekly income benefit to help cover personal or business expenses if you’re unable to work due to an accident or illness. Subject to the acceptance of your claim by the insurer, you’d receive these benefits for a set amount of time after your condition is verified by a doctor.

What does personal accident and illness insurance cover?

At its core, personal and accident illness insurance covers lost income if you can’t work due to an accident or illness. It can cover up to 85% of your salary (maximum limits apply) over the period you’re unable to work. It’s also generally possible to be covered for accidental death or disablement, which would mean a lump sum payment to beneficiaries such as your family if you died or became permanently disabled.

On top of this, you might be able to choose coverage including:

• rehab expenses
• funeral expenses
• business expenses
• chauffeur expenses
• support for your spouse or dependent children
• modifications to your house or car if you become permanently disabled.

What doesn’t personal accident and illness insurance cover?

A standard personal accident and illness policy might not cover injuries or illnesses that pre-date the policy or that are the result of intentional or criminal acts done by you. It also might not cover conditions related to pregnancy or childbirth. Other exclusions may include injuries or illnesses sustained while under the influence of drugs or alcohol, while participating in professional sports or motor sports or when you’re overseas for work for more than 4 weeks.

As with any insurance policy, every plan will have its differences, so it’s important to check your Product Disclosure Statement to know what you’re covered and what you’re not covered for.

Why would I want personal accident and illness insurance?

Getting personal accident and illness insurance is a good idea if you rely on your business as a primary source of income or if you don’t have a wide enough financial safety net and an injury or illness could leave you or your business unable to operate for weeks or months. Personal accident and illness cover can be particularly useful if you’re self-employed and don’t have access to benefits such as sick leave or workers compensation insurance benefits.

So, like any other insurance policy, you’d want personal accident and illness cover so you have peace of mind knowing that your life won’t come to a grinding halt if the unexpected happens.

What’s the difference between personal accident and illness insurance and income protection insurance?

Personal accident and illness insurance and income protection insurance differ in how much cover you get, for how long, how much they can cost and finally, how the policy benefits are paid out. Personal accident and illness insurance generally offer a fixed amount of cover for a shorter term (for example, up to 5 years) and can be a cheaper option. Income protection insurance pays a percentage of your lost income over a potentially longer period (for example, until you’re 65) and is generally more expensive.

Another difference between personal accident and illness insurance and income protection insurance is the type of insurance product they are.

If you’re new to working as a contractor, tradie or sole trader, you might find personal accident and illness insurance applications to be a bit more straightforward, while income protection applications can sometimes require paperwork documenting your health and financial history and jumping through similar hoops.

Helpful tip

Before you lock in a policy, consider things like how much your daily expenses are, what payout would be ideal to meet yours or your family’s budget, how long you want to be covered for and the waiting period you’re comfortable with before your policy kicks in. And remember, what you choose can feed into your premium. For example, more cover and a shorter waiting period typically means a higher premium.

So, it’s worth weighing up all your options and your situation to help ensure that you’re choosing the right policy for your needs.

Adrian Bennett

General Manager for General Insurance

Can business owners claim personal accident and illness insurance as a tax deduction?

Generally speaking, yes. As a business owner, you can claim the cost of your personal accident and illness premiums against the amount of income you’ve lost. You’ll just need to include any policy benefits that you receive on your tax return.

How do I choose a personal accident and illness insurance plan?

When choosing personal accident and illness cover, it’s a good idea to start by weighing up your income and expenses. Personal accident and illness insurance policies generally cover up to 85% of your salary, so you’ll want to figure out what percentage of your salary you could get by on. That means taking a close look not just at how much money you earn, but also at how much you spend on necessary expenses such as groceries, mortgage or rent, utilities and your car. And of course, consider the premium you can afford to pay for the level of cover you want.

• You can also choose to have cover for both accidents and illnesses or either.
• Consider waiting periods (the amount of time from an injury to when the payment would kick in) and different benefit periods (the amount of time you would receive weekly payments).
• Think about how much money you or your family would need if you, unfortunately, claim under the cover you’d chosen.

Once you have your answers to questions such as the examples above, you’ll likely have a better idea which plan will work well for you. And remember to go over the policy wording so you’re completely aware of the policy’s cover, exclusions and other conditions of cover.

Where can I compare personal accident and illness insurance?

You can compare personal accident and illness insurance online using an insurance comparison website that allows you to look at policy features and quotes from multiple insurers side by side.

Through our partnership with BizCover, we offer an online comparison tool that can help you find and compare personal accident and illness insurance policies as well as other types of business insurance policies from a range of business insurance providers in Australia.