Is salary continuance the same as income protection?
Salary continuance insurance and income protection are two ways to ensure you won't lose your monthly income if an illness or injury forces you out of work.
by Leigh-San Mo
Last update 15 Mar 2021
Salary continuance insurance and income protection insurance are two popular ways to ensure you won't lose the entirety of your monthly income if an illness or injury forces you out of work.
With such similar functions, you might be wondering, "is salary continuance insurance the same as income protection?"
In this guide, we'll review both types of insurance products, and note their similarities and differences.
On the surface, salary continuance insurance and income protection insurance are quite similar. Both insurance products allow you to insure up to 75% of your annual income in case an injury or illness forces you out of work.
Most salary continuance insurance and income protection insurance products cover you for illness and injury, even when that illness is terminal.
Most of the time, these insurance policies are used for the same thing as well: maintaining the lifestyle that you and your family love.
You can use both salary continuance insurance and income protection insurance to pay for things like:
Both forms of insurance are also available through superannuation funds---although there is a difference here that we'll explore below.
As you can see, income protection and salary continuance insurance in Australia serve very similar functions. However, there are a few differences to note when exploring your insurance options.
The first, and most striking difference between income protection and salary continuance insurance is in how you obtain them. Income protection is a routine form of insurance that is available as an individual or a group through your superannuation fund.
Salary continuance insurance, on the other hand, is almost exclusively available through your super fund. Group salary continuance insurance is almost always the only way to obtain such a policy, which is likely offered through your super fund.
There are several other differences between the two types of insurance policies, which we'll explore more below.
The features that come with a salary continuance insurance policy are usually limited to a percentage of your annual income. A lack of features is the case with most insurance policies you can obtain through your super fund. Since you're buying as part of a group, there will be less customisation available.
When buying an income protection policy as an individual, though, you'll have a range of options, features, and benefits that allow you to adjust the product based on your lifestyle and needs.
The benefit period for salary continuance insurance is typically limited to two years. Income protection insurance, when you purchase it as an individual, typically allows you to choose between a benefit period of two years, five years or up to age 65. Premiums will vary depending on your chosen benefit period.
It's also worth noting that your income protection insurance will follow you if you change roles or move to a new company, as long as you keep up with paying your premiums.
Since your salary continuance insurance is usually offered through your current employer, you will lose coverage if you decide to change companies and your new company uses a different insurance provider.
The premiums for salary continuance insurance are usually cheaper than those for income protection insurance since you'll be buying your cover as part of a group through your super fund.
However, there are some caveats that are worth considering here. One of the biggest considerations is the features and benefits period we discussed above. These are two areas where income protection insurance becomes more attractive than salary continuance insurance, even if the former costs more in premiums.
For instance, premiums for income protection are tax deductible, while those for salary continuance insurance are not. So, if you have income protection insurance, you'll be able to take advantage of these built-in savings at the end of the year.
Salary continuance insurance generally does not require any medical examinations to obtain coverage if enough people are insured together. This means no blood tests, physicals, or other forms of examinations.
Income protection insurance, on the other hand, often does require some sort of medical exam to obtain coverage, especially if you're buying as an individual and not through a super fund.
Interested in finding out more about life insurance or comparing policies? Click below to find an affordable policy that meets your unique needs.COMPARE & SAVE
This guide is of an informative nature only and not representative of Compare Club products. It should not be taken as medical or financial advice. Check with a financial professional before making any decisions.