Disability Insurance Income Need Calculator
Calculate monthly disability insurance benefit needed from gross income and expenses.
Returns coverage gap and recommended benefit at 60-70% income replacement.
Why Disability Insurance Matters The Social Security Administration estimates that one in four 20-year-olds will experience a disabling condition before reaching retirement age. Yet most people are significantly underinsured for income replacement if they cannot work.
The 60–70% Rule Industry standard: disability insurance should replace 60–70% of your gross income. The reason it is less than 100%: benefits paid from employer-paid premiums are taxable, but benefits from personally paid premiums are tax-free. Net effect is close to full income replacement after taxes.
Elimination Period This is the waiting period before benefits begin (like a deductible measured in days). Common options: 30, 60, 90, 180, or 365 days. Longer elimination periods mean lower premiums. Your emergency fund should ideally cover the elimination period.
Annual Premium Estimate Long-term disability (LTD) premiums typically cost 1–4% of the annual benefit. This calculator uses 2.5% as a midpoint estimate for a healthy adult.
Example Monthly gross income: $6,000 Target benefit (65%): $3,900/month Employer LTD covers 40% = $2,400/month Personal coverage needed: $3,900 − $2,400 = $1,500/month Annual premium estimate: $1,500 × 12 × 0.025 = $450/year