I found out yesterday from my accountant that insurance against loss of income is a tax deductible expense (in terms of personal taxes). Here is the relevant piece of the Income Tax Act, which also covers other deductions which may be made by an employer,

Quote Originally Posted by Income Tax Act
Schedule 4. (2)(4)

4) The amount required to be deducted or withheld from any remuneration under this Schedule by way of employees’ tax must be calculated on the balance of the remuneration remaining after deducting therefrom--

  1. any contribution by the employee concerned to any pension fund or retirement annuity fund which the employer is entitled or required to deduct from that remuneration, but limited to the deduction to which the employee is entitled under section 11(k) or (n), as the case may be, having regard to the remuneration and the period in respect of which it is payable;

  2. at the option of the employer, any contribution to a retirement annuity fund by the employee in respect of which proof of payment has been furnished to the employer, but limited to the deduction to which the employee is entitled under section 11(n) having regard to the remuneration and the period in respect of which it is payable;

  3. at the option of the employer, any premium paid by the employee in respect of which proof of payment has been furnished to the employer, in terms of an insurance policy—
    1. to the extent that it covers that employee against the loss of income as a result of illness, injury, disability or unemployment; and
    2. in respect of which all amounts payable in terms of that policy constitute or will constitute income as defined, but limited to the deduction to which the employee is entitled under section 11(a); and

  4. at the option of the employer, any contribution by the employee to a medical scheme as contemplated in section 18(1)(a) [and] in respect of which proof of payment has been furnished to the employer, if the employee is entitled to a rebate under section 6(2)(b),