Calculate how much disability insurance you need to protect your income. Compare short-term and long-term disability coverage options and premium estimates.
Most people insure their car, home, and health — but forget to insure their income, which is statistically their largest asset. A 35-year-old earning $75,000 per year has $2.25 million in future earning potential over a 30-year career. Social Security disability benefits average just $1,537 per month and are difficult to qualify for. One in four workers will experience a disability lasting 90 days or more before reaching retirement age. Disability insurance bridges the gap between your normal income and what you can earn while disabled, preventing a health crisis from becoming a financial crisis. The combination of employer-provided group disability coverage and a supplemental individual policy provides the most comprehensive income protection.
Disability insurance replaces a portion of your income if you become unable to work due to illness or injury. It is often called income protection insurance because it protects your most valuable financial asset — your ability to earn income. Most disability policies replace 60-70% of your gross income. There are two main types: short-term disability (STD) covers income loss for a few weeks to months, while long-term disability (LTD) covers extended periods ranging from 2 years to retirement age.
Most financial advisors recommend disability insurance that replaces 60-70% of your gross income. You don't need 100% replacement because disability benefits are often tax-free (if you paid premiums with after-tax dollars), and you won't have work-related expenses or retirement contributions when disabled. This calculator uses 65% as the target income replacement rate. If your employer provides disability coverage, subtract that from your target benefit to find your personal coverage gap.
The elimination period (also called the waiting period) is the time between when you become disabled and when benefit payments begin. Common elimination periods are 30, 60, 90, or 180 days. A longer elimination period means lower premiums — choosing 90 days instead of 30 days can save 15-20% on your premium. The right elimination period depends on your emergency fund: if you have 3-6 months of expenses saved, a 90-day elimination period is often the best value.
Many employers provide group short-term and long-term disability coverage as an employee benefit. Group LTD policies typically replace 60% of base salary (excluding bonuses and commissions) up to a monthly maximum, often $10,000-$15,000. However, group coverage has limitations: benefits may be taxable if the employer paid premiums, coverage usually ends when you leave the job, and the definition of disability may be more restrictive than individual policies. Supplemental individual disability insurance can fill gaps in employer coverage.
Short-term disability (STD) insurance covers income replacement for a brief period, typically 3-6 months, with a short elimination period (0-14 days). It covers illnesses, injuries, and maternity leave. Premiums are lower because the benefit period is short. Long-term disability (LTD) insurance begins after the STD period ends (or after the elimination period) and can pay benefits for 2 years, 5 years, or until retirement age. LTD covers serious, extended disabilities — the average LTD claim lasts over 2.5 years. Both types of disability coverage work together to provide comprehensive income protection.
This calculator provides estimates for educational purposes only. Actual disability insurance premiums and benefit amounts vary based on your specific situation, occupation, insurer underwriting criteria, elimination period, benefit period, and policy factors. Consult a licensed insurance agent or broker for accurate quotes and coverage recommendations.