Salary continuance insurance

Salary continuance insurance offers you some protection against loss of income if you're unable to continue working. It's similar to income protection insurance, but it's not exactly the same. Let's take a look.

What is salary continuance insurance?

Salary continuance insurance provides financial help if you're unable to work due to sudden illness or injury. It's held within a super fund, and you'll pay your insurance premiums from your super balance rather than directly from your bank account. This means that if you make a claim, benefits are paid into your super fund before being released to you.

Some employers offer group salary continuance insurance to their employees. However, it's not tax-deductible and is usually only payable for 2 years, unlike other income protection.

What does salary continuance insurance cover?

Salary continuance insurance can typically cover the following injuries and accidents:

• Full, permanent disability. If you become permanently disabled, policies will usually pay out 100% of the total monthly benefits for the full benefit period (usually 2 years).
• Partial disability. This means you can still do some work but can't earn as much as you used to because of the disability. In this case, you may only be paid a percentage of the monthly benefit amount. The exact amount will depend on the situation and how much less you're earning. You can generally keep claiming partial disability for the full benefit period or until you no longer qualify as partially disabled.
• Death. If you die while claiming salary continuation benefits, a policy might pay out several months of benefits in a lump sum to your estate through your superannuation fund.
• Recurring disability. If you suffer a recurrence of the same disability that entitled you to a previous claim, it will count as the same injury, and the waiting periods will be waived.
• Specific injuries. Suppose you suffer any one of the specific injuries laid out in your policy and are still suffering from this injury after the end of the waiting period. In that case, you may be paid monthly benefits depending on what kind of injury it is. For example, a salary continuance policy might pay the full monthly benefits for 3 months in the event of a fractured pelvis, 24 months for total blindness or 60 months for the total loss of multiple limbs.

What you need to know about salary continuance insurance

Types of salary continuance

The 2 main types of salary continuance insurance are:

• Permanent. In the event of total permanent disablement, policies will typically pay out 100% of the total monthly benefits for the full benefit period. Total and permanent disability means being unable to work any job with no signs of recovery.
• Temporary. Salary continuance cover will only pay you for a specific period of time, unlike income protection, which usually stops at 65. The total maximum amount of time the policy can pay out for is known as the benefit period. This is typically for 2 years after the end of the waiting period but may vary depending on the policy. The benefit period is the maximum amount of time you can get benefit payments, even if you're still disabled and unable to work after that.

You can choose whether to take out different types of life insurance under a single policy or purchase standalone policies. If you choose to take out standalone policies, you will need to let each insurer know that you have multiple life insurance policies that are active.

Breaking down the cost of salary continuance insurance

The cost of salary continuance insurance is affected by several factors, including your:

• Age
• Gender
• Occupation
• Waiting period
• Benefit period
• Cover amount

You won't have to pay for the premiums out of your bank account though, monthly payments are taken out of your superannuation balance. This means it will reduce the amount you have in your super for retirement.

We gathered quotes from 2 salary continuance insurers in Australia to help you understand how much getting cover could cost you. Costs are based on a benefit period of 2 years, with a 60 day waiting period. Quotes were taken in August 2021 and are subject to change.

Group salary continuance insurance

Group salary continuance insurance provides the same benefits as salary continuance insurance. It pays out a monthly benefit of up to 75% of your income when you're unable to work due to illness, accident or injury.

You can only receive group salary continuance insurance if your employee offers it as a benefit of your employment or if you're a member of a group super fund.

Did you know?

Sometimes, you'll hear group salary continuance insurance referred to as group income protection.

Pros and cons of salary continuance insurance

Still not sure if it's for you? Check out the pros and cons:

Can you take out multiple salary continuance insurance policies

✅ Yes. As is the case with multiple income protection policies, you can take out more than 1 salary continuance insurance policy. However, this doesn't mean that you'll receive a higher benefit payment each month.

Why not? Regardless of how many salary continuance insurance policies you take out, your monthly benefit will always be capped at 75% of your salary. This is to ensure that there is an incentive for you to want to return to full-time work when you have fully recovered.

Did you know?

People often choose to have multiple salary continuance policies to cover them in the case of a longer recovery time. Most companies only offer benefits for a maximum of 2 years, but you can choose your waiting period to work to your advantage.

It's not uncommon to:
1. Take out a policy to cover the immediate first 2 years of injury or illness.
2. Combine this with a different policy that specifies a 2 year waiting period.

Salary continuance insurance vs income protection

Salary continuance insurance and income protection both ensure you won't lose all of your monthly income if an illness or injury forces you out of work. However, the main difference between the 2 is how you get them.

You can receive income protection as an individual or through group insurance via your superannuation fund. On the contrary, salary continuance insurance is only available through your super, usually via your employer.

Compare income protection insurance

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Name	Product	Maximum Monthly Benefit	Maximum % of Income Covered	Maximum Benefit Period	Multiple Waiting Periods	Apply
AAMI Income Protection		$10,000	75%	5 years		Get Quote View details	If you’re an existing AAMI customer, you can save 5% on income protection. New customers can get one month free by paying annually.	Compare	loading Fetching your data...
NobleOak Disability Income Insurance Finder Award		First 24 months: $30,000. Thereafter: $25,250	70% for the first 24 months, 60% thereafter	Age 65		Get Quote View details	Get your first month free when you apply for NobleOak Disability Income Insurance before 31 October 2021. T&C's apply.	Compare	loading Fetching your data...
Suncorp Income Protection		$10,000	75%	5 years		Get Quote View details	Sign up and become a member of Suncorp Benefits. Access savings of up to 15% from major retailers. Existing members can get a 5% discount off their policy.	Compare	loading Fetching your data...
Insuranceline Income Protection		$10,000	75%	5 years		Get Quote View details	Get a $100 bonus gift after 2 months. Plus, and get 12 months cover for the price of 11 if you pay annually. T&Cs apply.	Compare	loading Fetching your data...
RAC Disability Income Insurance (Only available in Western Australia)		$30,000	70%	Age 65		Get Quote View details	When you purchase RAC Income Protection, WA residents receive complimentary RAC membership which includes access to discounts on fuel, savings on shopping, entertainment and more. T&Cs at rac.com.au.	Compare	loading Fetching your data...

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Questions you might still have about salary continuance insurance

• Can I claim more than 1 policy?

  Yes, but most income protection policies have built-in offset clauses. This means you can generally only insure up to 75% of your salary. This is to prevent you from taking out 2 policies and trying to claim on more than 100% of your policy.

• Is salary continuance insurance tax-deductible?

  No, unlike standalone income protection, premiums are not tax-deductible with salary continuance insurance.

• Who pays salary continuance insurance premiums?

  Ordinarily, it's you. Premiums are deducted from your super account. Some companies will apply for a group salary continuance insurance policy as part of a benefit they give to employees. Some superannuation funds will also include certain policies by default or as optional extras. Different parties may be paying premiums depending on the situation.

  • Your employer might pay the full amount
  • Your employer might pay a partial amount
  • Premiums may be getting deducted from your superannuation contributions
  • Premiums may be deducted from your salary or wages

• Is salary continuance insurance underwritten?

  Salary continuance insurance is not usually underwritten. It's one of the few ways Australians can access affordable cover free from medical underwriting.

• What is the difference between salary continuance and income protection?

  The main difference between salary continuance and income protection is that the former is only available through your super fund. However, there are a few other important differences.

• Does salary continuance insurance cover redundancy?

  No. It generally only covers you if you cannot work due to an illness, injury or accident that prevents you from doing your job. If you want cover for involuntary redundancy, look at redundancy insurance.

• What waiting period should I choose?

  Usually, you'll have the option of a 30, 60 or 90-day waiting period. To work out which waiting period works best for you, it's important to calculate how long you can rely on your own savings and any sick pay that you're eligible for to support yourself. Remember, you'll need to pay a higher premium if you want to opt for a shorter period of time.

• What benefit period should I choose?

  Most insurers will pay out salary continuance benefits for up to 2 or 5 years until you turn 65. You'll need to weigh up the cost of the premium with your general expenses to find the most appropriate benefit period for you.

• How much does salary continuance insurance cost?

  This depends on your age, gender, occupation and how much cover you're looking for. If you work in a high-risk environment or are at higher risk of illness or injury in your job, you may have to pay a higher premium. You can get a quote based on your specific circumstances using this form.