NSW Will Wage Insurance be Affected After Lump Sum Damages Payout?

[Wendy Bellamy]

I have been paying for wage insurance for 27 years. It has been a dominant cost in my life. I have now been medically retired and have received a lump sum payout for 18 % WBI caused through employer neglect.

Should what I receive from having wage insurance be affected by the lump sum damages payment?

 

[DMQC]

Yes, it will. See for example AAMI's income protection PDF which states:

Benefit limitations

Income Protection replaces up to 75% of your monthly income which has ceased because of your disability, however there are some circumstances when the monthly benefit payable to you may be altered or reduced. The monthly benefit amount payable to you will be recalculated if, in relation to the sickness or injury which caused your disability, you receive ‘other payments’ by way of: other disability, group, sickness or accident insurance cover, including a mortgage replacement policy or through a superannuation fund; workers’ compensation schemes; accident compensation schemes; or other statutory insurances payable for loss of income.

If any of the other payments listed above are received in the form of a lump sum in compensation for loss of earnings, we will convert that part of the compensation to income on the basis of 1% of the loss of earnings component and reduce the monthly benefit amount payable to you by that component. In the event of a claim, the monthly benefit amount payable will be the lesser of: 75% of your annual earnings (reduced by any ‘other payments’); and the monthly benefit.

Assuming your policy's PDS has a similar provision, it will have some impact on your insurance payment.

 

[Wendy Bellamy]

Thank you for your response.

My solicitor has state:

"There is no breakdown for the compensation you received. It is classified as a lump sum award of general damages."

I am receiving no monthly payments and nothing I have received has been labelled "for loss of income".

I do understand the lump sum payment may affect any payments from wage insurance however it has been 2 months since the mediation and they still haven't contacted me with any determination.

My apologies for my financial ignorance but I am unsure as to what "we will convert that part of the compensation to income on the basis of 1% of the loss of earnings component and reduce the monthly benefit amount payable to you by that component" means.

 

[DMQC]

Apologies, I didn’t not realise you were only awarded general damages. Assuming the damages was for pain and suffering etc. (anything aside from loss of earnings, either past, future or earning capacity) then no, it won’t impact your payment re income protection.

Hope that helps.

 

[Wendy Bellamy]

Thank you for your assistance. The legal and financial worlds take you on quite a journey in an effort to understand one's rights.

This helps a lot. I will post the outcome. Thank you once again.