Group Salary Continuance Insurance

What is Group Salary Continuance Insurance?

Group salary continuance insurance, also known as group income protection, is a type of cover that provides a monthly benefit to replace up to 75% of your income, when you are unable to work in normal capacity due to an illness or injury.

  • Cheaper premiums. A group salary continuance policy allows employees of a company to obtain the group policy at competitive wholesale premium rates.
  • Easy to maintain payments. Premiums are usually automatically taken out of your superannuation.
  • Automatic acceptance. Medical exams rarely required for group salary continuance policies.

Who's eligible for group salary continuance?

Group salary continuance cover is only available to employees and members of group super funds.

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Key features of group salary continuance insurance

Some of the features and options may include (but not limited to):

  • Your choice of benefit period: You have the option to choose how long you would like to be covered for, usually from 2, 5 years or up until the age of 65.
  • Your choice of waiting period: Waiting period is the amount of time you will have to be unable to work until you receive your first benefit payment and it is usually available from 30, 60, 90 to 180 days.
  • Death benefit: A multiple of the insured salary amount is payable if the policyholder dies.
  • Total and permanent disability benefit: A benefit amount is payable is the insured employee is unable to work due to an illness or injury.
  • Partial disability benefit: If the policyholder can only work at a reduced capacity due to an illness or injury after a predetermined amount of time from suffering from a total disablement, a benefit will be payable.
  • Recurring disability benefit: If the insured member is suffering from a relapse of a disability that the member has obtained the benefit payments for upon returning to work, the waiting period will be waived.
  • Rehabilitation assistance: All the rehabilitation costs that incur during the period of your illness or injury may be reimbursed.
  • Interim cover: Automatic accident cover for when the member’s application has not been yet approved and/or was being underwritten.
  • Guaranteed renewable cover: The policy will be renewed each year, as long as the premium payments are met and no further medical exam is necessary, regardless of the changes in health.
  • Worldwide, 24/7 cover: Cover will be provided all year round, no matter where you are.

Depending on your employer’s agreement with the insurance provider, you may also apply for group life insurance and/or group TPD cover if they are on offer.

What are the benefits and drawbacks of group salary continuance for workers

If you are an employee and you have been thinking of obtaining an insurance cover on your ability to earn, then group salary continuance insurance through your employer’s super fund is a good place to start. However, you should also be aware that there will be some drawbacks if you are looking for a more comprehensive cover.

  • Salary continuance policies are purchased at wholesale rates. This means you will be paying lower premiums, to that of individually-owned policies.
  • Minimal fuss application. Simple level of administration is required from the insurance provider.
  • Automatic acceptance. There is no medical examination required.
  • Smokers can get access. The same affordable premium rates as non-smokers.
  • Premiums deducted from super contributions. Super fund members can get their premium payments deducted from their superannuation account, instead of paying from their after-tax income.
  • More cover than WorkCover. Group cover provides a more comprehensive protection compared to Work Cover and/or health insurance.
  • Some benefits and additional options are not available. It can be less comprehensive compared to individually-owned policies.
  • Most group salary continuance insurance providers do not offer agreed value policies. This means, there may be a gap between what is provided and what is actually expected and/or needed.
  • It may not be transferable. If you changed jobs or moved to a new super fund, you may no longer be able take advantage of the discounted rate of your employer’s group policy.
  • Cover can be voided without you knowing. If your employer doesn't make payments into your super fund on time your cover may become void.
  • Retirement savings will reduce overtime. This is because your premium payments are deducted from your superannuation.
  • There may be longer processing time when you claim. This could result in a delay in receiving the benefits.
  • No tax-deductions. You cannot claim your group policy premium payments through your super fund as tax-deductible.

Why should employers consider group salary continuance insurance for their workers?

Group salary continuance insurance can provide employers with a competitive edge. Some of the underlying benefits include:

  • The ability attract good workers
  • Retain current employees
  • Increased job satisfaction
  • Increased level of productivity and loyalty.
  • Less delay in returning injured and ill employees back to work (e.g. through rehabilitation benefits)
  • Better relationships between employers and employees

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Questions our users have about salary continuance insurance

What is group salary continuance insurance?

It's a type of risk insurance that provides coverage of up to 75% of an average monthly salary for workers who are unable to work due to an illness or injury. This policy is designed to protect employees that are members of a super fund and to provide employers means to protect their company's assets.

How many employees will a company need to have to obtain a group policy?

Some insurance providers will offer policies to groups as few as 10 members, while some others may require at least 20 members. The minimum number will vary between providers, so it is important to check with the insurer.

Will there be tax benefits for the company which obtains group salary protection cover?

Companies will be able to take advantage of tax deduction from the premiums paid and its benefits will not attract any fringe benefits tax or GST.

Group salary continuance insurance is recommended for employers if you are looking to provide additional level of protection for your workers and for employees, especially at times of prolonged illness and injury and a time off work is required for full recovery. Group salary continuance can provide financial security that is truly valuable for both employer and employees.

William Eve

Will is a personal finance writer for specialising in content on insurance. While he cannot give personal advice to clients, Will enjoys explaining the intricacies of different types of protective cover to help individuals and businesses find affordable cover that won't leave them underinsured.

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