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Disability Insurance Gap Calculator

Find the disability insurance coverage you need to replace lost income if you can't work.

Inputs

$
%

Typically 60–70%; most policies cap at this level

Most LTD policies have 90-day (3-month) elimination periods

Until age 65 (e.g., at age 35 with 30 years, ~360 months)

$

Employer group DI, supplemental policies, state benefits

%

Opportunity cost of capital; typical 2–4%

Results update as you type, and the address bar keeps your numbers so the link you share reopens this exact calculation.

Total disability insurance gap (PV)

$961,238

67% income replacement.

Detailed results
Monthly benefit needed$4,002
Monthly gap (after existing coverage)$4,002
Loss during waiting period$12,006
Gap as % of annual income1,335.1%

What this result means

Total disability insurance gap (PV): $961,238.

You have a monthly gap of $4,002. Over your benefit period, that's a present-value gap of $961,238.

Year-by-Year Benefit Stream

Annual benefit and cumulative replacement income during the benefit period.

Year-by-Year Benefit Stream. 30 rows, first 12 shown.
YearMonthly BenefitAnnual BenefitCumulative Benefit
1$4,002$48,024$48,024
2$4,002$48,024$96,048
3$4,002$48,024$144,072
4$4,002$48,024$192,096
5$4,002$48,024$240,120
6$4,002$48,024$288,144
7$4,002$48,024$336,168
8$4,002$48,024$384,192
9$4,002$48,024$432,216
10$4,002$48,024$480,240
11$4,002$48,024$528,264
12$4,002$48,024$576,288

How this is calculated

Monthly benefit needed = income × replacement_percent. PV gap = (monthly_gap) × annuity factor over benefit duration. Waiting period loss = benefit_needed × waiting_months.

Disability insurance replaces a portion of your income if you cannot work due to illness or injury. Unlike life insurance (which replaces all financial impact), disability insurance typically replaces 60–70% of gross income — enough to cover essential expenses while maintaining incentive to return to work.

Own-occupation vs any-occupation. Own-occ policies pay if you can't do your specific job; any-occ policies only pay if you can't do any gainful work. Own-occ is more generous (and more expensive).

Short-term vs long-term. Short-term disability (STD) covers weeks to months (e.g., 3–6 months); long-term disability (LTD) covers years or to age 65. Most people have employer group STD and should supplement with group or individual LTD.

Waiting period. The elimination period (30, 60, or 90 days) before benefits start. Longer elimination periods lower premiums. Pair with an emergency fund covering the waiting period.

Tax treatment. Employer-paid disability premiums are typically non-deductible, but benefits received are tax-free. Individual policy premiums are not deductible, but benefits are tax-free if you paid premiums with after-tax dollars.

Group vs individual. Employer group disability is cheaper but not portable. Individual policies are expensive but portable and guaranteed renewable. Many people supplement group with individual coverage.

Assumptions

  • Income replacement percentage applied uniformly throughout benefit period.
  • Monthly benefit caps at the stated replacement percentage of income; actual policies may have maximum benefit limits.
  • Discount rate applied to future benefits to compute present value; typical rate 2–4%.
  • Waiting period is included as a lump loss (not discounted separately).
  • No inflation adjustment modeled on future benefits (actual LTD may include COLA riders).

Frequently asked questions

›How much income replacement is typical?

Most policies replace 60–70% of gross income. This covers essentials while maintaining incentive to return to work. Some higher-earner policies go to 80%.

›What's the typical waiting period?

30, 60, or 90 days are common. Longer waiting periods mean lower premiums. Use an emergency fund to cover the gap.

›How long should coverage last?

To age 65 is ideal for working-age individuals (30–40 years remaining). Five-year and ten-year rider options are cheaper but riskier.

›Does my employer provide disability coverage?

Most employers offer short-term disability (3–6 months, 60–70% replacement). Long-term disability is less common — check your benefits. Many people need individual LTD coverage.

›How is disability income taxed?

If your employer paid premiums, benefits are taxable. If you paid premiums with after-tax dollars, benefits are tax-free. Check your policy.

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