Insurance Suite

Disability Insurance Income Replacement Calculator

What would you actually live on if you couldn't work?

Direct answer

Long-term disability cover typically replaces 50 to 70 percent of base pay, capped at a monthly maximum and offset by Social Security or workers' compensation. The honest way to size it is against your actual monthly obligations rather than salary. This tool nets out taxes, existing benefits and household income, then shows the monthly gap.

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Legal Disclaimer

ClaimLedge provides educational estimates for general informational purposes only. This tool does not constitute insurance, legal, or financial advice and is not a quote or a policy recommendation. Disability benefits vary by policy, state law, and your employer's plan documents. Before purchasing coverage or relying on a benefit estimate, review your plan documents and consult a licensed insurance or financial professional.

Estimate Your Disability Income Gap

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Your income & target
Take-home is lower than gross — the model works on gross because most policies quote replacement as a percentage of it.
The income level that keeps your life solvent. Insurers rarely issue policies that replace more than ~70% of gross.
Coverage you would already receive
Group LTD usually waits 90 days and replaces 40–60% of base salary. If your employer paid the premium, the benefit is taxable.
Any individual disability policy paying you per month. Leave blank if you own none.
Approval is slow and uncertain. Run once with SSDI and once without — the without-run is the conservative plan.
The waiting period before benefits start. It does not change the monthly gap — it changes the price and how much emergency savings you need to bridge it.

Calculated in your browser · Nothing submitted to ClaimLedge · Compare saves only when you choose it

Your Monthly Income Gap Awaiting input

—

The monthly shortfall between your income target and the coverage you would already receive. This is the amount a private disability policy should replace (or savings should cover).

Target income: — · Working with — · Annual gap: —

$0—
Monthly income target—
Employer LTD benefit—
Private disability owned—
Expected SSDI—
Monthly gap (floor at $0)—

Planning note: —
Monthly gap assumes benefits continue while you are disabled and ignores cost-of-living adjustments. Group LTD is taxable when the employer paid the premium; individual policies are usually tax-free if you paid the premium. Educational estimate only — not insurance advice.

Next step

The other half of income protection

Disability cover protects the working years. Life cover protects the dependants if you are not there for them.

Check life cover

The gap people don't plan for

Most workers can name their life insurance number and have no idea what their disability coverage would pay. That is backwards: a working-age adult is roughly three times more likely to be disabled than to die before retirement, and the financial damage of a disability is usually larger because it hits income rather than replacing it. The question is simple — what would I actually live on if I couldn't work? — and the answer is rarely the number on the benefits page.

Monthly gap = (Income × Target %) − (Employer LTD + Private DI + SSDI)

This tool runs that arithmetic with the coverage you already have, so the result is the monthly shortfall a private policy or savings plan has to fill.

Why 60–70% and not 100%

Insurers cap disability replacement near 70% of gross for a reason: it holds your standard of living roughly intact while work-related expenses (commuting, work clothes, lunches, payroll taxes on the benefit) fall away. A 100% replacement target also removes any financial incentive to return to work, which is why policies are structured to avoid it. Running the calculator at 60% and 70% brackets the realistic range.

The tax asterisk

Group LTD is typically taxed if your employer paid the premium — a 60% gross benefit can become closer to 40% of take-home. Individual disability policies are generally tax-free benefits when you paid the premiums yourself. Because tax treatment swings the real number, the calculator states the assumption in its note and you should apply your own benefit-tax status when reading the gap.

Hypothetical example

A project manager earning $6,500/month targets 60% replacement ($3,900). Their employer LTD replaces 50% ($3,250) and they own no private disability and expect no SSDI. The monthly gap is $650 — about $7,800/year — which a small individual policy or a larger emergency drawdown must cover. If a 180-day elimination period fits their savings, the monthly premium for the closing policy is modest. This is a hypothetical illustration, not a quote or a policy recommendation.

What this calculator does not account for

  • The tax status of your specific benefits and income sources
  • Bonus, commission, and overtime pay that group LTD usually excludes
  • Cost-of-living and residual/partial disability provisions
  • Pre-existing-condition exclusions and medical underwriting outcomes
  • State short-term disability and paid-family-leave programs

For executives & high-net-worth principals

Disability risk hits executives hardest, because the income at stake — base salary, bonus, equity, carried interest — is both large and, often, only partially covered by a group LTD plan that caps benefits and excludes compensation components. A founder or executive should run the gap twice: once with just the group policy, and once assuming bonus and equity vanish, which often reveals a six-figure annual shortfall. An own-occupation individual policy that covers your actual specialty is usually the highest-value coverage decision a high earner makes, and it is also one of the few you generally cannot buy after a health event.

What happens next

  1. Find your employer's LTD summary plan description and write down the actual benefit percentage, wait period, and whether the premium is employer-paid.
  2. Run the calculator at 60% and 70% targets, and with and without SSDI, to bracket your real gap.
  3. If a gap shows, compare own-occupation quotes from independent agents — the wording of the policy matters more than the premium.
  4. Keep an emergency fund that covers your elimination period; the wait is the part most people forget to plan for.

Frequently asked questions

What percentage of my income should disability insurance replace?

Planners commonly target 60–70% of pre-disability gross income — enough to keep the mortgage and the utility bills moving while still reflecting the benefits' tax status and the fact that some work-related expenses stop. Insurers cap coverage near that range by design; the gap between your target and what you would already receive is what a private policy should fill.

Is my employer's LTD benefit enough?

Group long-term disability typically replaces 40–60% of base salary (bonus and commission often excluded) and is taxable if the employer paid the premium. After taxes, a 60% group benefit can land closer to 40% of take-home — which is why a private individual policy, or an own-occupation rider, often sits on top. Run your actual numbers here rather than assuming the group policy covers you.

Should I count Social Security disability (SSDI) in the gap?

Carefully. SSDI pays a modest benefit and the initial approval rate is low — around a third of applicants are approved on the first application, and many ultimately successful claims require an appeal. Most disability planners build the plan without fully relying on SSDI, then treat an approval as a windfall that shrinks needed savings. The calculator lets you include an expected amount, but the conservative run excludes it.

What does 'own occupation' mean and why does it matter?

An own-occupation policy pays if you cannot perform your specific job; an any-occupation policy pays only if you cannot perform any job for which you are reasonably qualified. The distinction can be the difference between getting paid and not — a surgeon unable to operate is disabled under an own-occupation policy but may not be under any-occupation. Own-occupation coverage costs more and is worth it for specialized work.

Is disability coverage especially important for executives and founders?

Yes. Group LTD plans usually cap benefits and exclude bonus, commission, and equity, so a high earner's real income is often under-covered. And because group plans are typically any-occupation after a few years, an executive or physician who cannot return to their specialty may stop receiving benefits entirely. An own-occupation individual policy that fits the executive's income and specialty closes that gap.

How long do disability benefits last?

Short-term policies usually pay three to six months, while long-term policies pay for two years, five years, ten years, or to age 65. The benefit period drives the premium more than anything else, so match it to how long your expenses would take to adjust.

Will Social Security disability cover me instead?

Social Security requires a condition expected to last at least twelve months or to result in death, most initial applications are denied, and the benefit is modest. Private coverage fills the gap rather than replacing the need for it.

What is the difference between own-occupation and any-occupation cover?

Own-occupation pays when you cannot perform your own job; any-occupation pays only when you cannot work in any job suited to your training. Own-occupation costs more and matters most for specialists whose skills do not transfer to other work.