Personal Accident or Income Protection Insurance: What’s the Difference?

Melissa Matzenbacher-Galan | Dec 21, 2022 | minute read

Personal Accident or Income Protection Insurance: What’s the Difference?Whenthinking about insurance, it might be easy to overlook something as simple as protecting your income. Ask yourself this question, “What might happen to my earning ability if I was in an accident?” You may even have a policy in place currently, but you need to fully understand the difference between personal accident and income protection insurance.

We hope to provide you with information showing you the difference between these two policies.

Income Protection Insurance

Income protection insurance provides income if you are unable to work due to an illness or accident. This is often referred to as sickness or disability insurance. Coverage pays out until you can return to work or until you retire, die, or reach the end of the policy term, whichever comes first.

Income protection insurance typically pays out between 60% and 85% of your income if you are unable to work. The policy covers most illnesses either in the short or long term (depending on the type of policy and its definition of incapacity) and can be claimed as often as necessary while the policy is in effect.

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There is frequently an agreed-upon waiting (or “deferred”) period before payments begin. The most common waiting periods are four, thirteen, twenty-six, and twelve weeks. The monthly premium decreases with increasing delay.

Who Needs Income Protection Insurance?

  • Small business owners
  • Anyone whose employer does not provide any sick time or disability coverage as part of their benefits package
  • Providers whose income in the primary support for their family
  • Workers who are years away from retirement

Personal Accident Insurance

Personal accident coverage, also known as personal injury insurance, is a policy that pays out compensation in the form of a lump sum if you suffer a severe injury or death in an accident.

Personal Accident Insurance

Typically, accident insurance pays a cash benefit directly to you, which you can use to pay for anything you need such as groceries, medical bills, or even your mortgage. This means that if you are unable to work due to an injury, your family will still be able to pay for unanticipated out-of-pocket expenses. 

You Need Personal Accident Insurance if...

  • Your employer does not provide any accident coverage as part of your benefits package.
  • You need your funds to pay bills while recuperating
  • You are a small business owner
  • You are still years away from retirement


Differences Between Personal Accident Insurance and Income Protection Insurance

Coverage Personal Accident Income Protection
Income replacement No Yes
Specific amount lump sum Yes Lost income
Accidents Yes Yes
Sickeness, illness, or accidents No Yes
Waiting period Yes Yes
Qualifying No Yes


Details to Remember About Income Protection and Accident Insurance

  1. Keep your information up to date
  2. Read your policies and know the terms and conditions
  3. Use an agent to help you determine the right coverage for you
  4. Choose a suitable level of coverage
  5. Be honest about your medical history

Accident insurance and income protection insurance can be a great, affordable way to supplement and cover the additional expenses that your health and disability insurance may not cover. These can also be a good income replacement should you become unable to work for a period of time.

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Leap | Carpenter | Kemps Insurance Agency Can Help

Contact the experts at Leap Carpenter Kemps Insurance Agency. They have been in business for over seven decades and have licensed experts on hand to guide you on the best coverage for your organization. Call for a free quote today!

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About The Author

Melissa specializes in auto insurance, flood insurance, homeowners insurance, special event insurance, renters insurance, and watercraft insurance. She prides herself on knowing our markets inside and out.

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