Insurance Planning

Income protection insurance

Premiums and salary continuance

The premiums for income protection insurance vary according to the insured benefit, the waiting period, the benefit payment period and other variables, such as your age, health and occupation.

A type of income protection is salary continuance. Salary continuance is often the term used to describe the income protection policy that can be held through superannuation. Income protection policies can be taken out through a member’s superannuation fund as well as outside of superannuation. The benefit of taking income protection insurance outside of super is that it provides the insured with a tax deduction. One of the benefits of taking income protection insurance within a members superannuation account is that the cost of the premiums can be paid for out of the member’s account balance thus reducing the need to find the cash to pay for the insurance; however, care needs to be taken to ensure that the premiums do not erode a member’s account balance over time.

This type of policy will also have an insured amount, a waiting period and a benefit period.

It’s most common to see salary continuance in super funds of large employers. You would see your insurance details on your yearly super fund statement if this was the case.

Unlike the other personal insurance covers, premiums taken out on income protection insurance policies are generally tax deductible to the insured (where they are also the policy owner). However, income protection benefit payment/s received from a successful claim are generally assessable to tax because the benefit payment/s replace the lost salary.