Sickness and Accident Insurance

Sickness and accident insurance, also known as income protection insurance, is designed to protect your income if you are unable to work for a period of time due to illness of injury.

Many people, including some tradesman insurance brokers, confuse accident and illness insurance with income protection insurance. Whilst the two covers are similar, there are some major differences.

General Aim

The policy will generally protect up to 75% of your income, and will pay you a monthly benefit once your waiting period has passed. The waiting period can be anything from seven days to two years, but the most common period is thirty days.

Your monthly insurance benefits will continue until you are able to return to work or until your benefit period is up, whichever is sooner. The benefit period can range from one year through until you reach age 65.

The benefit period and waiting period are both agreed to upfront when you take out your income protection or accident and illness policy. Generally the shorter the waiting period and the longer the benefit period, the higher the premium will be.

Sickness and accident

Income Protection

Important Differences

Accident and illness insurance is cancellable

This is a dangerous situation, as it may leave you without cover at the next renewal after you have suffered from a particular illness or injury. This is called a 'cancellable' policy, which is true of all accident and illness policies.

This is an important factor to think about, because as a tradesman you know that injuries such as a bad back can come and go, and you need to make sure that you are covered every time your back plays up, not just the first time.

A proper income protection policy is 'non-cancellable', which is also known as 'renewable'. This means that as long as you keep paying your renewal, the insurer cannot cancel your policy, exclude any conditions, or add any loading to your policy for any reason.

This gives you the peace of mind knowing that regardless of how poor your health may become over the years, your income protection policy will continue to give you complete protection without any nasty surprises.

Accident and illness insurance can be cheaper than income protection

This is an important point for the average tradesman who needs to keep his expenses down, however many believe that the increased premiums on income protection are worth it for the extra protection it provides.

Income protection will not always be more expensive than accident and illness insurance, so it's worth shopping around to find the best deal.

Accident and illness has shorter benefit periods

A proper income protection policy gives you the option to protect your income all the way through to age 65. This means that if you suffer an injury or illness that is serious enough to prevent you from ever returning to work, your policy will keep paying you every month until you reach age 65.

Income protection has more flexibility

Often with accident and illness insurance you will have to be completely incapacitated before you can make a claim, however some income protection policies will allow you to claim even if you can still attend work for up to ten hours per month.

Which should you choose?

For the tradesman with a mortgage, or a wife and kids, income protection should really be the only option considered. Yes it will cost a few dollars extra each month, but it is well worth it for the extra peace of mind you'll have with a proper insurance policy. And remember, the premiums on income protection are tax deductable.

Here at Trade Risk we have a network of insurance experts that includes general insurance brokers as well as financial advisers, which means that our people can deal in both accident and illness insurance as well as income protection insurance.

Our tradesman insurance experts can compare the cover for you, show you the differences in premium, and recommend which option will be best for you.

Ultimately the decision on which cover you choose is up to you. We will tell you what we think is best, but we won't push you into one option or the other.

Protecting your income is important for any tradesman, and regardless of whether you decide on accident and illness insurance or income protection insurance, the main thing is that you are protecting yourself as well as your family from the financial impact of you not being able to work.

For more information on your tradesman insurance please give one of our experts a call or complete our easy online quote request.

Information on this website should be seen as general advice only, as it does not take into account your personal circumstances. You should not act upon any information on this website without first consulting a qualified financial adviser or insurance broker
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