Salary Continuance Insurance vs Income Protection

What's the difference between Salary Continuance and Income Protection Insurance?

Both income protection and salary continuance insurance give you the kind of security you are looking for as far as ensuring you retain an income stream when you can no longer attend work because of illness or injury. This ongoing benefit can be used to ensure you receive a steady flow of income, with most policies providing up to 75% of the your regular income.

 FeatureSalary ContinuanceIncome Protection
Maximum benefit period2 yearsTo age 65
Available through super?Only available through superannuationCan be funded both inside and outside of superannuation
Group protectionPrimarily taken out within Group super plan which can result in a group discountCover primarily provided as standalone
Tax deductiblePremiums are not tax deductiblePremiums are generally 100% tax-deductible
FlexibilityAs cover is generally bought in bulk, cover is not as flexible as standalone income protection and cannot be tailored as closely to applicants needsCover can be tailored to include additional benefits with choice of benefit periods, waiting periods, premium payment frequency

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Details Features
Income Protection
Income Protection
Cover up to 85% of your income up to $10,000 per month if you can't work due to sickness or injury. Cover for over 1,000 jobs and full-time, part-time and self-employed.
  • Monthly benefit up to $10,000
  • Cover for applicants up to age 60
  • 30 day cooling-off period
Go to site More info
Income Protection
Income Protection
Receive up to 75% of your income each month to a maximum of $25,000 if you can't work due to serious illness or injury.
  • Monthly benefit up to $25,000
  • Available for applicants up to 59 years old
  • 21 day cooling off period
Go to site More info

Salary continuance insurance and income protection as life insurance products

Both Salary Continuance and Income Protection Insurance provides financial protection in the event that you are unable to work, should you become disabled due to an serious injury or illness. Most policies may also provide coverage if you have been diagnosed with a terminal illness.

These types of income insurance products provide a monthly replacement of up to 75% of your regular income. These benefit payments can be used to maintain your family’s lifestyle and cover any living expenses, such as:

  • Groceries, food, and clothing
  • Utilities; electricity, water, gas and telecommunications
  • Rent or mortgage repayments
  • Short-term debts; credit card bills and loans
  • Long-term debts
  • Children’s school fees

The maximum amount of cover that you can insure with both salary continuance and income protection is 75%. There may be other income insurance providers that offer coverage in excess of 15%; however, the remaining amount must be used as superannuation contributions.

Key features of salary continuance insurance and income cover

Salary Continuance and Income Protection insurance both share a common purpose, which is to offer financial benefits on a monthly basis if you cannot work due to illness or injury. The extent of coverage for both policies is similar; however you may find that there are some differences in the features that salary continuance insurance and income protection offer.

Some of the differences between salary continuance and income protection insurance that you may find include:

Salary Continuance Insurance
Income Protection Insurance
Access to cover
A form of income protection that is held within a superannuation fund. If you do not have super fund, you do not have the access to salary continuance insurance.Held as a standalone income insurance policy; however, you can opt to have the cover inside your super fund and pay for the premiums with the balance in your super.
Medical exam requirement
You are not required to undertake any blood tests or medical examinations.You may be required to complete some health questionnaires, blood tests and medical exams.
Level of cover
Features and benefits on offer are generally quite limited.More comprehensive features and benefits are offered and can be tailored to your needs.
Assistance if made redundant
Salary continuance insurance does not provide coverage for involuntary unemployment.Income protection does not provide a benefit if you have been made redundant. However, some insurers may provide some assistance by freezing your cover or waiving your premiums.
Benefit period
Most salary continuance insurance providers may only provide benefit payments to a maximum of two years.You can choose the benefit period that is most suitable to your needs and situation, from 2, 5 years, or up until the age of 65.
Premium rates
Because salary continuance insurance is purchased in bulk either by an employer and/or through your super fund, the premiums are more cost-effective.Income protection premiums may cost more than salary continuance insurance; however, it provides more comprehensive cover through a wide range of features and additional options.
Future insurability
You will continue to be covered provided that premium payments are met. If you are covered under group salary continuance insurance through your employer, your cover will cease if you change your job.If the premium payments are met, you will continue to be insured, regardless of any changes in your health.

Choosing between salary continuance insurance and income protection insurance

To determine which income insurance product most suited to you will depend on your needs and individual circumstances.

Pros and cons of Salary Continuance Insurance

  • Since this cover is only available through superannuation, you may already have default cover that you are unaware of.
  • Affordable cover for more basic needs.
  • Suitable for individuals who may have just entered the workforce.
  • You will get automatic acceptance when you apply for cover.
  • If you have a pre-existing medical condition, you are not required to undertake any medical exam.
  • Smokers pay the same premium rates as non-smokers.
  • Provide coverage for workers who have high-risk occupations.
  • Limited benefit period to cover for significant illness or injuries, which may require a longer period of recovery.
  • Only offers basic cover and it is not suitable for more complex needs.
  • Premiums are paid through your super fund, which will affect your retirement savings.
  • Premiums paid are not tax-deductible.
  • If you are covered under a group policy, your cover will cease when your employment has been terminated.
  • Complicated claims process.

Pros and cons of Income Protection Insurance

  • You can benefit from a comprehensive policy as you will have the flexibility to tailor your cover with features and benefits that suit your needs.
  • Your choice of waiting and benefit period that will suit your financial circumstances.
  • Your cover will continue regardless of any changes in your health and if you keep on top of your premiums.
  • Income protection premiums are tax-deductible.
  • May be more expensive compared to income protection cover held inside superannuation.
  • You may be required to undertake a medical exam or blood tests.
  • Applicants with poor health will pay more in premiums and some exclusions may apply.
  • Smokers will pay higher premiums, as much as 20% more.
  • The nature of your occupation will have an effect on the level of premiums you pay. High-risk occupations will generally pay higher premiums.


Income protection insurance is important to have, especially if you are the main income earner and have a family who depends on you financially. Income protection is not only suitable for workers who earn a regular salary with limited leave provisions, but also those who are self-employed and primarily earn their salary and commissions from their business and are not entitled to workers compensation benefits.

An illness or injury can happen to anyone, often unexpectedly, and the first thing that will be affected is your ability to work. Consider whether your savings will be enough to keep on top your financial obligations when your sick leave has run out, and if your recovery takes longer than expected. Will you be able to survive financially?

If the answer is no, then consider the benefits of having salary continuance or income protection insurance in place. When considering income protection insurance either held inside or outside of your superannuation, it is important that you assess your insurance needs and choose the one that is suitable to your circumstances and budget.

Both options have their advantages and disadvantages to consider. To ensure that you make the right decision when weighing up your options, it is always wise to talk to an insurance consultant who can provide guidance tailored your needs and situation.

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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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