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Salary Continuance Insurance vs Income Protection
Salary continuance insurance and income protection both provide a financial safety net if you can’t work due to illness or injury. How you access them, your benefit period and the cost is where they tend to differ. Here's the key differences summarised.
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We break down the similarities and differences between salary continuance insurance and income protection, so you can make an informed decision as to which one is right for you.
Key things to consider
Salary continuance insurance and income protection both pay out up to 75% of your regular earnings each month to cover general living expenses if you're unable to work due to an accident, illness or injury.
You can take out income protection as an individual, but salary continuance insurance is generally only available through your employer.
Salary continuance insurance premiums are taken from your superannuation fund, but you'll normally pay for income protection premium directly from your bank account.
Compare salary continuance insurance and income protection in detail
The extent of coverage for both products is similar; however, you there are some differences in the features that salary continuance insurance and income protection offer. Here's the full rundown:
Feature
Salary Continuance Insurance
Income Protection
Maximum benefit period
2 years is standard, but some insurers may offer 5 year benefit periods. Your employer will normally choose this for you.
Choose to receive payouts for 2 or 5 years, or up until the age of 65. You can choose a benefit period that is most suitable to your needs and financial situation.
Level of cover
Usually part of a group policy, features and benefits tend to be generalised and quite limited.
With individual policies, you'll have the choice of customisable features and benefits so you can choose how much payout you'll receive and specify a benefit and waiting period.
Availability
You'll pay premiums and receive benefits through your superannuation. If your super falls below $6,000 or if you stop paying into your super, you will void your policy.
Most choose to pay income protection premiums directly from a bank account. You can pay premiums from your super too, but they will become non-tax-deductible.
Best for?
Primarily taken out within a group super plan or through your employer.
Usually taken out by individuals that don't qualify for group insurance. For example, if you are:
Self-employed
Small business owner
Not entitled to workers compensation benefits
Tax-Deductible
Premiums are not tax-deductible.
Premiums are 100% tax-deductible if paid directly from your bank account.
Flexibility
Usually purchased as part of a group plan, salary continuance insurance is harder to tailor to your exact needs.
Policies can be tailored to you. This includes additional benefits with a choice of benefit periods, waiting periods, premium payment frequency and cover amount.
Medical exam requirements
You don't usually need to undertake any blood tests or medical examinations to take out a policy.
In some cases, you will have to complete health questionnaires, blood tests and/or medical exams.
Premium costs
Salary continuance insurance is typically bought in bulk by employers. By purchasing many universal policies at once, employers usually receive a discounted price on insurance premiums. This is why salary continuance premiums tend to be cheaper than income protection premiums.
You can get a policy starting from around $14 per month (ages 20-29) to $45 (ages 50-59).
Income protection is usually purchased as a standalone policy. Premiums tend to be more expensive, as policies are catered to an individual's specific needs. You can choose exactly how much cover you'd like, including your waiting and benefit period.
You can get a policy starting from around $59 per month (ages 20-29) to $170 (ages 50-59).
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.
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.
Cost comparison: Salary continuance insurance vs income protection
Salary continuance insurance typically demands lower premiums compared to income protection insurance. This is because it is usually purchased as a bulk insurance policy, and can enjoy group discounts. Income protection insurance, on the other hand, tends to demand higher premiums as it is normally customised to an individual's exact needs.
With both salary continuance insurance and income protection, premiums are affected by your age, gender and occupation, along with the waiting and benefit period you choose, and how much cover you're looking for.
We gathered average quotes from 5 income protection brands and 2 salary continuance brands in August 2021. Quotes are subject to change.
Insurance Type
25-29 Male/Female
30-39 Male/Female
40-49 Male/Female
50-59 Male/Female
Income Protection Average Cost
$59.02
$61.27
$82.64
$170.44
Salary Continuance Average Cost
$14.01
$16.41
$24.72
$45.78
Compare income protection policies from these direct Australian brands
1 - 6 of 6
Available salary continuance policies in Australia
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.
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.
Income Protection Insurance Pros and Cons
Pros
Cons
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.
Still not sure which product is right for you?
It's important to have some kind of income protection, especially if you're the primary earner in your household, are self-employed or not entitled to workers' compensation benefits.
Before you settle on one kind of insurance, ask yourself the following questions:
Do you have enough savings to keep on top of your financial responsibilities if your sick leave runs out? If not, income protection or salary continuation insurance could be a much-needed lifeline.
What kind of premiums can you afford to pay each month? If you're happy to pay more, income protection insurance offers a wider range of customisable features.
Is it important for you to customize your options or can you get by on a more generic policy? If you want to specify your waiting or benefit period, or request a specialist policy, you'll need to opt for income protection insurance.
Would you rather pay monthly premiums from your super or your current account? Both income protection and salary continuance insurance can be paid from your super, but only income protection can be paid directly from your bank account.
Both salary continuance insurance and income protection insurance have their advantages and disadvantages to consider. To make sure that you make the right decision when weighing up your options, you can talk to an insurance consultant who can provide guidance tailored to your needs and unique situation.
Speak to an expert to find the right product for you
An adviser can help you find cover from trusted life insurance brands.
Life Insurance Quiz - Take this quick, 1-minute quiz to find the right life insurance cover for you.
Income Protection Insurance - Compare income protection insurance features and benefits in just a few seconds.
Salary Continuance Insurance - Discover the pros and cons of salary continuance insurance, compare providers side-by-side and get a quote.
Why you can trust Finder's income protection experts
We're free
You pay the same as buying directly from the insurer. We make money from referral fees when you choose a policy, but you don't pay any extra.
We're experts
Our team of income protection experts have researched and rated dozens of policies as part of our Finder Awards and published 80+ guides.
We're independent
Unlike other comparison sites, we're not owned by an insurer. Our opinions are our own and all guides must meet our editorial standards.
We're here to help
Since 2016, we've helped thousands of Australians find income protection by explaining your cover options, simply and clearly.
Frequently asked questions
Both pay out a part of your salary if you're unable to work due to an accident, illness or injury but income protection is available for individuals while salary continuance is generally only available through your employer.
Income protection can be worth it if you or your loved ones are financially impacted in the event you're unable to work due to sickness or injury. It can help relieve the financial pressure of paying your ongoing bills, covering your household expenses and affording any new medical costs that may pop up.
Income protection covers you if you become sick or injured and can't work temporarily while total and permanent disability (TPD) insurance pays a lump sum if you become permanently disabled and are unable to work again.
James Martin is the insurance editor at Finder. He has written on a range of insurance and finance topics for over 7 years. James often shares his insurance expertise as a media spokesperson and has appeared on Prime 7 News, WIN News, Insurance News, 7NEWS and The Guardian. He holds a Tier 1 General Insurance (General Advice) certification and a Tier 1 Generic Knowledge certification, both of which meet the requirements of ASIC Regulatory Guide 146 (RG146).
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