95 per cent of Australians are underinsured1. While we happily insure our homes and cars,…
Just like hand washing and mask wearing are key to protecting your family during this pandemic, personal insurance can provide some reassurance your family is protected if you get ill or injured. As the coronavirus pandemic continues, many Australians are filled with questions and anxieties over the state of their future. If there was a major injury (accident) or illness the impact on the family would be immense, causing a huge amount of pressure and financial stress, especially if the main income earner is in question. COVID-19 has caused many Australians to think about impact an illness would have on their families and in turn consider the value in having personal insurance. Following is an in depth look at the different types of personal insurance and COVID-19.
Can I apply for or increase cover on my insurance policy if I have COVID-19?
If you have recently been diagnosed with COVID-19, you will need to wait until you have confirmation from your doctor that you have recovered, before submitting an application for new or increasing existing cover. The same applies if you have been in contact with an individual who has been diagnosed with COVID-19. You will need to ensure you have medical clearance confirming that you do not have the virus before applying for any cover.
It is important to know what your insurance and welfare options are in advance, in the unlikely but possible scenario where you or someone you care about is afflicted with the virus.
Does workers comp give me coverage for COVID-19?
There is often an incorrect assumption that someone could be covered for any injury or illness with workers compensation. An employee will only be covered by workers compensation if they become injured during work or sick directly from their employment. For example, workers compensation could only cover an employee for COVID-19 if they contracted it during the course of their employment, with their job playing a key role in contracting the virus.
Anything not directly related to your work, such as contracting coronavirus on the way home from work or at the supermarket, or even getting injured in an accident on the way to work; does not apply for workers compensation. Therefore, personal insurance can be key to protecting your income and in helping support both you and your family in any event that causes you to not be able to work.
An illness can cause an incredible amount of pressure for families, as they navigate hospitals, testing and paperwork. Balancing this with a family’s everyday life is more than enough to ask of anyone, without adding financial pressure to the mix, as a result of the illness taking away a much-needed income.
What types of personal insurance give me cover for COVID-19?
There are four different types of personal insurances and there is an insurance guide to help you determine the cover that you should take, depending on your personal circumstances. Let us take a look at the insurances that offer cover for COVID-19.
When discussing the impacts of the coronavirus, it’s comforting to know that life insurance policies don’t have a pandemic exclusion and for the most part, will still pay out for COVID-19 related claims.
Life cover pays out a specified amount of funds on the event of your death. The money will go to nominated people as beneficiaries on your policy. If you are unfortunate enough to pass away due to coronavirus, your family will receive a benefit, provided you have followed government travel advice and not contracted the virus while travelling to a country with ‘do not travel’ advice from the government.
If you do not yet have a life insurance policy, even if you work in a high risk work environment (for example, a healthcare worker), you may still be able to take out a policy and be covered for COVID-19. However, it is important to seek advice to determine your personal situation before submitting an application with an insurer to save the time and energy of having an application declined unnecessarily.
What types of Insurance do not cover me for COVID-19?
Income protection insurance is put in place in order to replace the income you aren’t receiving due to sickness or injury. It works well for people who are employed, or self-employed, small business owners, or individuals whose business relies heavily on their ability to work.
If you were made to self-isolate during lockdown, temporarily put off work, or made redundant, income protection will not be able to cover you.
If you contract coronavirus and have income protection insurance, it is possible to claim, if the waiting period has passed. It is important however to consider that most people with COVID-19 have been known to recover after 14 days, which means that a claim on your income protection policy may not be successful.
Another option for financial support could be the government’s JobSeeker payment, which offers payments if you are between ages 22 and the age pension age. This payment of up to $790.10 is made every fortnight depending on your individual situation.
Total and Permanent Disability Cover (TPD)
TPD provides cover if you are totally and permanently disabled. It can contribute to cover the expenses of rehabilitation, debt repayments and the future cost of living. Most claims for TPD are assessed on whether the claimant is expected to work again in any job relating to their education, training, and experience. Other TPD claims look at whether an individual can complete some basic daily living or working activities. While there aren’t any exclusions for COVID-19 in most TPD insurance policies, you would still need to meet the criteria for a total and permanent disability claim.
Trauma (or critical) insurance can give you a lump sum payment from your policy in the scenario that you become critically ill or injured and need extensive medical care for your recovery. Trauma Cover will be able to cover you if you are diagnosed with a specified illness. Trauma policies include major illnesses and defined events that will make a significant and lasting effect on your life, such as cancer or a stroke. While COVID-19 may not be a defined sickness under a trauma policy, serious cases of coronavirus may be defined under other defined sicknesses like intensive care, needing continuous ventilation for a certain number of days.
Working out the fine print of insurance can be overwhelming, will vary from policy to policy, and with your individual circumstance. To gain some clarity and peace of mind for the unexpected moments in life, be sure to get in contact with Elliot Watson Financial Planning to assess your current situation and personal insurance needs on 02 4038 1623.
The information within, including tax, does not consider your personal circumstances and is general advice only. It has been prepared without taking into account any of your individual objectives, financial solutions or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser.
The views expressed in this publication are solely those of the author; they are not reflective or indicative of licensee’s position and are not to be attributed to the licensee. They cannot be reproduced in any form without the express written consent of the author.
Elliot Watson Financial Planning Pty Ltd is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.
7. How COVID-19 Highlights The Importance of Having Personal Insurance