Disability Insurance Income Need Calculator
Calculate how much disability insurance coverage you need to protect your income if you become unable to work.
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