How much disability insurance do I need?

Aim to replace about 60 percent of your gross income, which roughly matches your take-home pay. Subtract any employer long-term disability benefit to find the gap an individual policy should fill.

How much does disability insurance cost?

An individual long-term disability policy typically costs 1 to 3 percent of your annual income, more for older applicants, longer benefit periods and shorter elimination periods.

Is employer disability coverage enough?

Group long-term disability usually replaces only 50 to 60 percent of base salary, is capped, excludes bonuses, and is taxable if the employer pays the premium. Many professionals add an individual policy on top.

Free calculator

Disability Insurance Calculator

Your ability to earn an income is probably your largest asset. This calculator estimates the monthly benefit you should carry, the gap your current coverage leaves, and what an individual policy might cost.

Your income & coverage

Gross monthly income

$

Target income replacement

Existing monthly disability benefit

$

Employer group LTD plus any expected Social Security disability.

Essential monthly expenses

$

Liquid emergency savings

$

Your age

Benefit period

Elimination (waiting) period

How the disability insurance calculator works

Long-term disability replaces a portion of your income if illness or injury keeps you from working. The math is straightforward:

Recommended benefit = Gross monthly income × Replacement %
Coverage gap = Recommended benefit − Existing benefit

We target roughly 60% of gross income because individual policy benefits are usually tax-free when you pay the premium with after-tax dollars — so 60% of gross often equals close to 100% of your take-home pay.

The premium estimate uses the industry rule of thumb of 1–3% of income, adjusted for age, benefit period and elimination period.

Why your income is worth insuring

A 35-year-old earning $84,000 who works to 65 will earn roughly $2.5 million, more with raises. The Social Security Administration estimates more than one in four of today's 20-year-olds will experience a disabling condition before retirement. Yet disability is the coverage people most often skip.

How to optimize what you pay

Lengthen the elimination period. Moving from 90 to 180 days can cut the premium 10–20% if your emergency fund can bridge the gap.
Buy young. Rates rise steeply with age and any new diagnosis can add exclusions.
Use employer coverage as the base and add an individual policy for the untaxed top-up.
Add a future-increase option so you can raise the benefit as your income grows without new underwriting.
Skip the shortest benefit periods unless budget forces it — the point of the coverage is a long or permanent disability.