Disability Insurance Needs Calculator
Estimate the monthly disability insurance benefit you need: your target income replacement, minus existing coverage and benefits, to find the coverage gap to insure.
How to use this tool
- Enter your gross monthly income.
- Choose the percentage of income you'd want to replace if disabled (often 60-70%).
- Enter any disability coverage you already have, such as employer LTD.
- Read the monthly gap to insure and check it against your essential expenses.
Disability insurance replaces a portion of your paycheck if illness or injury keeps you from working — a far more common risk during your career than dying. This calculator sets a target benefit (a percentage of your income), subtracts coverage you already have, and shows the monthly gap you'd want a private policy to fill.
Formula
Disability coverage gap
Target benefit = Monthly income × Replacement%
Coverage gap = max(0, Target benefit − Existing coverage)
Shortfall vs expenses = max(0, Essential expenses − Existing coverage)
The gap is floored at zero — if your existing coverage already meets the target, you need no more.
How it works
Disability policies replace a percentage of income rather than the full amount, partly because benefits from an individually-paid policy are typically tax-free, so a 60-70% replacement often preserves close to your take-home pay. This calculator multiplies your gross income by your chosen replacement percentage to set a target monthly benefit, then subtracts any coverage you already hold — most commonly employer-provided long-term disability (LTD) — to reveal the gap a supplemental policy should fill.
It also compares your existing coverage against your essential monthly expenses, because the true purpose of disability insurance is to keep the lights on, the mortgage paid, and food on the table. Employer LTD frequently caps benefits or replaces a smaller share than you expect, and group coverage usually ends when you leave the job, so the expense comparison is a useful sanity check on whether your safety net actually covers the basics.
This is general information, not financial advice. Real policies differ on the elimination (waiting) period, benefit period, own-occupation versus any-occupation definitions, and inflation riders — all of which affect cost and value. Work with a licensed agent or fee-only advisor to match a policy to your situation.
Worked example
$6,000/month earner replacing 60% with $1,500 employer LTD
- Target benefit: $6,000 × 60% = $3,600 per month.
- Subtract existing coverage: $3,600 − $1,500 = $2,100.
- Coverage gap to insure: $2,100 per month.
Monthly coverage gap to insure: $2,100.00
Monthly coverage gap by income and replacement % ($1,500 existing coverage)
| Monthly income | 60% target gap | 70% target gap | 80% target gap |
|---|---|---|---|
| $4,000 | $900.00 | $1,300.00 | $1,700.00 |
| $6,000 | $2,100.00 | $2,700.00 | $3,300.00 |
| $8,000 | $3,300.00 | $4,100.00 | $4,900.00 |
| $10,000 | $4,500.00 | $5,500.00 | $6,500.00 |
Key terms
- Disability insurance
- Coverage that pays a monthly benefit if illness or injury prevents you from working.
- Income replacement
- The share of your earnings a disability policy aims to replace, commonly 60-70% of gross income.
- Long-term disability (LTD)
- Coverage, often employer-provided, that pays benefits for an extended period after a waiting period.
- Elimination period
- The waiting period after a disability begins before benefits start paying — longer waits lower the premium.
Frequently asked questions
- How much disability insurance do I need?
- A common target is to replace 60-70% of your gross income. Subtract any employer or group coverage you already have to find the gap a supplemental policy should fill.
- Isn't my employer's coverage enough?
- Often not. Employer LTD frequently replaces a smaller percentage, caps the benefit, and ends if you leave the job. Compare it to your essential expenses to see whether it truly covers the basics.
- Are disability benefits taxable?
- It depends who paid the premium. Benefits from a policy you paid for with after-tax dollars are generally tax-free; benefits from employer-paid coverage are usually taxable.