Income Protection for FIFO Workers: 6 Things to Check

You’ve got the steel caps, the hi-vis, and the hard hat. On site, you’re protected from just about everything. But the question most FIFO workers never ask until it’s too late is: what protects your salary if you can’t work?

If you’re a mining worker earning a large FIFO income, your ability to earn is probably your biggest financial asset. Bigger than the house, the ute, and the boat. Yet, many people in the FIFO industry are underinsured, wrongly insured, or insured in a way that disappears right when they need it.

Let’s look at how income protection for FIFO workers actually works, where the common gaps are, and what you can do about them.

What is Income Protection Insurance?

Income protection insurance is designed to pay part of your lost income if you’re unable to work due to illness or injury. Instead of a one-off lump sum, it pays you a regular monthly benefit, like a stand-in salary while you recover.

It usually replaces a percentage of your pre-tax income, with the benefit based on what you earned in the 12 months before your illness or injury.

Income Protection for FIFO Workers: Here’s The Catch

This is the big one for FIFO insurance. Many mining workers assume workers’ compensation has them covered. It does cover a lot, but only for injuries connected to your job.

In Queensland, injuries on the direct journey between home and work can generally be covered as well, through what’s known as a journey claim. But workers’ comp won’t help if:

• You come off your motorbike on a weekend during R&R
• You’re diagnosed with cancer, heart disease or another serious illness
• You’re dealing with a mental health condition that isn’t work-related
• You hurt your back moving the couch at home (we’ve all been there)

Put simply, workers’ comp covers the job. Income protection for FIFO workers covers you, on site, at home, on holidays, and everywhere in between. And when you spend half your year off site, that’s a lot of uncovered time.

Is The Insurance in Your Super Enough?

Most mining workers have some insurance inside their super fund, and it’s a good start. Insurance through super is often available by default without medical checks, which can be handy if you work in a high-risk job.

But “default” often means “one size fits most”, and FIFO workers aren’t most, so keep these points in mind:

• It may be too low. Default cover can be lower than what you could arrange outside super. On a $150k+ salary, the default amount may not come close to covering your actual lifestyle and debts.
• It can quietly switch off. Cover can stop if your account becomes inactive, your balance drops too low, you change funds or you hit an age limit. Changed jobs and rolled your super over? Worth double-checking your cover came along for the ride.
• The fine print matters. Occupation definitions, exclusions and benefit periods vary widely between funds, and higher-risk roles can be treated differently.

If you’re not sure what your fund actually offers, our guide to industry super funds explains how fund insurance works.

The Features That Matter Most For FIFO Insurance

Not all income protection for FIFO workers policies are built the same:

Waiting period. This is how long you wait before payments start, typically anywhere from 14 days to two years. A longer waiting period usually means cheaper premiums, but you’ll need savings to bridge the gap.

Benefit period. This is how long payments continue if you can’t return to work. Common options are two years, five years, or up to a set age such as 65. For a serious illness or injury, two years can go by faster than a 14/7 roster.

Occupation rating. Insurers rate jobs by risk. A site office administrator and an underground operator may pay very different premiums, or face different policy terms. Being accurate about your role matters, because getting this wrong could cause problems at claim time.

How your income is assessed. Because the benefit is based on your recent earnings, it’s worth understanding how allowances and overtime feed into your “income”. Our guide to FIFO salary packages breaks down base pay versus the extras.

A Quick Example

Jake is 34, and he runs a dump truck in the Bowen Basin, and earns around $160,000 a year.

During R&R, Jake injures his shoulder badly in a weekend footy game and can’t operate machinery for eight months. Because it happened off site and outside work, workers’ comp isn’t an option.

With no personal income protection, Jake has a mortgage, a car loan and a family, and nothing coming in once his leave runs out.

With a policy covering 70% of his income, he’d receive roughly $9,300 a month before tax after his waiting period ended. That’s the difference between a stressful few months and a full-blown financial crisis.

This example is illustrative only and doesn’t reflect any specific policy.

Is Income Protection For FIFO Tax Deductible?

Often yes, and this is where FIFO workers on higher tax brackets can really benefit. The ATO allows a deduction for premiums you pay to insure against the loss of your salary and wages. The key detail is that this generally applies to policies held outside your super. Premiums for income protection held inside your super fund can’t be claimed on your personal tax return.

Keep in mind that the payments themselves are taxable. Any income protection benefit that replaces your salary needs to be declared in your tax return.

For more on what you can (and can’t) claim, check out our FIFO Tax Return Guide, or see the official rules on the ATO website.

What About Life Insurance & TPD Cover For FIFO Workers?

Income protection for FIFO workers is one piece of the puzzle, but a well-rounded insurance plan for FIFO workers often includes:

• Life insurance: a lump sum for your family if you pass away
• TPD cover: a lump sum if you’re permanently unable to work
• Trauma cover: a lump sum if you’re diagnosed with a specified serious illness or injury

Each does a different job, and in some cases you may be able to claim on more than one. We explain how in Can I Receive Multiple Payouts From Different Insurance Policies?

It’s also worth reviewing your cover whenever life changes, like buying a home, having kids or changing roles. Here are 3 life events when you may consider amending your life insurance.

FIFO Insurance Claims

Having a policy is step one. Getting it to pay out is step two, and it’s where many people give up.

Under the Life Insurance Code of Practice, insurers are expected to give you an initial decision on an income protection claim within two months. Delays can still happen when paperwork, medical evidence or employer details are missing.

The HPartners team regularly supports clients through the claims process, from paperwork to negotiating with insurers. You can read what some of them had to say on our testimonials page. If you’re dealing with a health setback right now, our Unexpected Health Event page is a good place to start.

You can also compare insurers’ claims histories using Moneysmart’s life insurance claims comparison tool.

Quick Income Protection Checklist

1. Do you have income protection, and is it inside or outside super?
2. How much would it pay per month, and would that cover your bills?
3. What’s the waiting period, and do you have savings to cover it?
4. What’s the benefit period: two years, five years, or to age 65?
5. Is your occupation listed correctly?
6. Has your cover followed you through any super fund or job changes?

If you answered “not sure” to more than one of those, you’re in good company, and it’s exactly why we’re here.

FAQs: FIFO Insurance

Do FIFO workers need income protection if they have WorkCover? In most cases, it’s worth considering. Workers’ compensation generally only covers work-related injuries and eligible journey claims. Income protection can cover illness and injuries that happen outside work, including during your R&R.

Is income protection more expensive for mining workers? It can be. Insurers price policies based on occupation risk, so hands-on and underground roles may cost more than office-based ones. Waiting period, benefit period and your health also affect the price.

Can I get income protection through my super? Many super funds offer it, sometimes by default. It can be convenient and may not require medical checks, but the cover amount, terms and duration may not suit a high-income FIFO worker.

Is income protection tax deductible for FIFO workers? Premiums for income protection held outside super are generally tax deductible. Premiums paid through super aren’t deductible on your personal tax return. Any benefit payments you receive are taxable.

What’s the difference between income protection and TPD cover? Income protection pays a monthly benefit while you temporarily can’t work. TPD cover pays a lump sum if you’re permanently unable to work. Many mining workers benefit from having both.

How much income protection do I need? Start with a budget. Work out your monthly expenses and the income you’d need to replace, and don’t forget to factor in super contributions. Our FIFO Pay Calculator guide is a handy starting point for understanding what you actually take home.

Protect Your FIFO Paycheque

You wouldn’t head onto site without your PPE! Your income deserves the same treatment.

At HPartners, our financial advisers help FIFO and mining workers find insurance that fits their job, their income and their life. Because we offer financial planning, accounting and legal services under one roof, your insurance, tax and super strategy all work together.

Ready to check your cover? Book a chat with our team, call us on 1300 656 260, or learn more about our Insurance Advice & Risk Protection services.

Any advice is general in nature only and has been prepared without considering your needs, objectives or financial situation. Before acting on it, you should consider its appropriateness for you, having regard to those factors. Before making any decision about whether to acquire a financial product, you should obtain the Product Disclosure Statement.