What is Disability Insurance Needs Calculator?
Free disability insurance needs calculator. Income × replacement % minus SSDI estimate, with short-term and long-term coverage gap analysis. Estimates the annual premium for the LTD gap. No signup required.
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Free Disability Insurance Needs Calculator
Compute the disability insurance coverage you actually need. Monthly income × replacement % (default 65% — privately-purchased policies are tax-free under IRC § 104(a)(3) so 65% gross ≈ 100% of after-tax living costs) less estimated SSDI = required monthly benefit. Compares against your existing short-term and long-term disability coverage to surface the gap. Includes a rough premium estimate for the LTD gap.
Your income
Industry standard: 60-70%. Privately-purchased policies pay tax-free, so 65% of pre-tax replaces roughly 100% of after-tax living costs.
Hard to qualify; average 2025 award ~$1,580/mo. Most professionals shouldn't count on it.
Current coverage
Usually employer-paid; typically 60% of salary for 3-6 months.
Employer LTD or private policy. Pays until age 65 (or until you can return to work).
Required monthly benefit
$6,500
Long-term coverage gap
$6,500/mo
Estimated annual premium: $1,560 (1-3% of benefit/yr is typical industry range).
Required monthly
$6,500
LTD gap: $6,500/mo
Required/mo
$6,500
LTD gap
$6,500
Why disability insurance matters more than life insurance for many people
The Social Security Administration estimates 1 in 4 working-age Americans will experience a disability lasting 3+ months at some point in their career. That's far more likely than premature death — yet disability insurance is dramatically under-bought relative to life insurance. The reason most often given: "my employer covers it." Usually that's a half-truth at best.
Short-term vs long-term disability
Short-term disability (STD) covers the first 3–6 months and typically replaces 60% of pre-tax salary. Most employers offer it as a default benefit; many states (CA, NY, NJ, RI, HI) mandate it through state programs.
Long-term disability (LTD) takes over after STD ends and lasts until you can return to work or age 65. This is where coverage gaps hide. Many employer LTD plans cap monthly benefits at $5,000–$10,000 — which sounds large until you realize a high earner ($300k+) would replace less than 25% of income. Other LTD policies have ungenerous "any-occupation" definitions (see below). And taxes: employer-paid LTD benefits are taxed as ordinary income (IRC § 105), making the after-tax replacement even thinner.
Own-occupation vs any-occupation
The single most important policy term is the disability definition. Own-occupation means you're considered disabled if you can't perform YOUR specific job — even if you could work in a different field. A surgeon with a hand injury can't operate, so own-occ pays out. Any-occupation means you must be unable to do ANY job you're reasonably qualified for. Far harder to claim; insurers love it. Many group LTD policies start as own-occ for 2 years, then switch to any-occ for the long term. Privately-purchased policies are often own-occ for the entire benefit period.
Tax treatment
Privately-paid policies: benefits are tax-free per IRC § 104(a)(3). That's why a 65% gross replacement nets out to roughly 100% of after-tax living costs. Employer-paid policies: benefits are fully taxable. Many tax planners recommend that employees PAY for LTD with after-tax dollars (through payroll deduction post-tax) specifically to get the tax-free benefit, even though it costs more upfront. Talk to HR about your plan's tax election.
Common disability insurance mistakes
- Assuming SSDI will be there. SSDI is hard to qualify for (60%+ initial claim denial rate), pays modestly ($1,580/mo average 2025), and high earners often don't qualify because they don't fit "unable to do ANY work" definition. Plan as if SSDI is $0.
- Counting on the employer benefit cap. If your monthly benefit cap is $10k but you earn $30k/month, you're replacing only 33% of income. Most professionals supplement employer LTD with a private "overhead" policy.
- Letting it lapse when changing jobs. Group LTD typically can't be ported. Buy a portable individual policy in your healthy years (before potential health issues make underwriting expensive or impossible).
- Choosing the wrong elimination period. The elimination period (waiting period before benefits start) usually defaults to 90 days. Longer = cheaper premium but you need 6+ months of emergency fund to bridge. Shorter = expensive. 90 days is the sweet spot for most professionals with adequate savings.
- Not maxing out the benefit period. "5-year benefit period" sounds long but a 35-year-old with a permanent injury would be cut off at age 40. Always select the longest benefit period (typically "to age 65") unless premium is genuinely unaffordable.
Frequently Asked Questions
How much disability insurance do I need?+
Industry standard is 60–70% of pre-tax income. Privately-purchased policies pay tax-free (IRC § 104(a)(3)), so 65% of gross income approximately covers 100% of after-tax living costs. Subtract your employer LTD benefit and any SSDI you expect to qualify for; the remainder is the gap to fill with a private policy.
What's the difference between short-term and long-term disability?+
STD covers the first 3–6 months of disability, typically 60% of salary. LTD takes over after STD ends and pays until you can return to work or reach age 65. Most employers offer STD as a default benefit; LTD is sometimes available but often capped at a benefit level that's insufficient for high earners.
Should I get own-occupation or any-occupation coverage?+
Own-occ — if you can afford it. Own-occupation pays if you can't perform YOUR specific job (e.g. a surgeon with a hand injury, or a software engineer who can't code due to cognitive impairment). Any-occupation pays only if you can't do ANY job you're reasonably qualified for — far harder to claim. Many group LTD policies are own-occ for 2 years then switch to any-occ; private policies often stay own-occ for the entire benefit period.
Is the benefit taxable?+
Depends on who paid the premium. Privately-purchased policies (you pay with after-tax dollars): benefits are TAX-FREE per IRC § 104(a)(3). Employer-paid policies: benefits are fully taxable as ordinary income. Some employers offer a tax election so employees can pay post-tax for a tax-free benefit — worth asking HR about.
What is SSDI and should I count on it?+
Social Security Disability Insurance. Hard to qualify for (60%+ initial claim denial rate). Pays modestly (~$1,580/mo average 2025). Has a 5-month waiting period plus 24 months before Medicare eligibility. High earners often don't qualify because they don't meet the "can't do ANY work" definition. Plan as if SSDI is $0 unless you have strong reason to expect approval.
What's a typical premium?+
Industry midpoint is roughly 1–3% of benefit amount per year. So $6,000/mo benefit ($72k/yr) might cost $720–$2,160/yr in premium. Heavily age, health, occupation-class, and feature dependent — get actual quotes.
Should both spouses buy disability?+
Both partners who contribute income (or who would need to replace each other's economic contribution like primary caregiving) should be covered. The lower-earning spouse often needs proportionally MORE coverage because their income is more critical to family budget margins.
Is my data stored?+
No. All math runs in your browser. Income and family info never touch any server. No broker referrals.
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