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Disability Insurance Calculator

Last updated 29th Sep 2022

This disability insurance calculator can help you to estimate how much disability insurance you might actually need. By examining your present income sources, as well as any potential disability income sources, the calculator can provide you with an approximation of any possible disability insurance gap.

Calculator Definitions

The variables used in our online calculator are defined in detail below, including how to interpret the results.

Annual Income ($ / Year)

This is the total of your annual income, before state and federal income taxes. You should include the total of all your compensation, such as your base salary and any bonus.

Income Tax Bracket (%)

This is the income tax bracket into which you fall. The calculator will use this number to reduce your before tax salary into a net monthly income figure.

Sources of Disability Income

In this next section, you will be asked to supply some of your potential sources of disability income.

Group Disability Insurance (%)

If you already have disability insurance through a group, such as your workplace, this is where you would enter that information. Please note that disability insurance is usually stated in terms of a percentage of your gross salary replaced. For example, if your group disability insurance is for 60% replacement pay, then you would enter that value here.

Maximum Monthly Benefit ($ / Month)

Oftentimes group disability insurance has a cap, or maximum monthly benefit, which it will provide to the insured. If your plan has a maximum monthly benefit, then enter that amount here. If your plan does not have a maximum benefit, set this value to 10% of your annual income so the benefit is not reduced.

Social Security Disability ($ / Month)

Many times a worker that is disabled is eligible for benefits supplied by Social Security Disability Insurance. As a guide, the maximum individual disability benefit under Social Security is approximately $2,500, and for a family it is around $4,000. If you're not sure of your eligibility benefits, you can visit www.ssa.gov. Keep in mind that most group disability benefits are reduced by the amount supplied by Social Security, and that is how this calculator works.

Monthly Expenses

In this next section of the calculator, we will be listing sources of monthly expenses. The calculator lists several categories of major expenses, with the hope this will prompt the user to think about other household costs.

Mortgage / Rent ($ / Month)

This is the mortgage payment or rent you pay each month. If you've paid off your mortgage, make sure you include any monthly property taxes paid on the home.

Childcare ($ / Month)

This is the amount of any childcare related expenses that you pay each month.

Car / Personal Loans ($ / Month)

If you have any car or personal loans that you're paying monthly, then enter that amount here.

Utilities ($ / Month)

These are your monthly utility expenses including water, sewerage, telephones, cell phones, electric, gas, propane, fuel oil, and cable television.

Insurance ($ / Month)

These are the insurance payments you make each month including life insurance, car insurance, and homeowners insurance.

Credit Card / Loans ($ / Month)

If you carry a balance on your credit card or have any other monthly debt payments, then enter that amount here.

Household Items / Food ($ / Month)

Here you would include costs such as clothing, food, and other items you might typically purchase each month.

Other / Savings ($ / Month)

If you have some other savings goal, such as college expenses for a child, then enter that amount here.

Current Monthly Income ($ / Month)

This is your current monthly income, which is calculated by taking your annual income and adjusting for taxes.

Current Monthly Expenses ($ / Month)

This is a simple total of all the monthly expenses you've previously listed.

Disability Income Sources

The following section will outline all of your potential sources of disability income.

Group Disability Insurance ($ / Month)

The group disability insurance is calculated based on the percentage and maximum supplied earlier. The amount of the insurance is also reduced by the Social Security benefit that you've supplied, since this is common practice.

Total Disability Income ($ / Month)

This is the total of all the sources of disability income including disability insurance, Social Security, and other income sources you've identified.

Disability Income Gap ($ / Month)

This is the potential disability income gap that exists. This is the difference between the sources of disability income, and the monthly expenses you've identified. If you believe there is a large gap in your disability income, then you should seek the services of a professional to determine if you are adequately insured.

Disability Insurance Calculator

Disclaimer: These online calculators are made available and meant to be used as a screening tool for the investor. The accuracy of these calculations is not guaranteed nor is its applicability to your individual circumstances. You should always obtain personal advice from qualified professionals.

Moneyzine Editor

Moneyzine Editor