Disability Insurance Calculator
Disability insurance replaces part of your income if illness or injury stops you working. Sizing the benefit means covering essential spending, not your whole salary, and knowing the premium for that protection.
Covered benefit
$3,000.00
- Percentage-of-income benefit
- $3,000.00
- Monthly premium
- $18.00
- Annual premium
- $216.00
Values update as you type. This calculator covers the single scenario its formula assumes — see Common Mistakes for what it leaves out.
The formula this calculator uses
Benefit = income x coverage percent (capped at the spending gap); Premium = benefit / 100 x rate
- income
- Monthly gross income to protect
- coverage
- Share of income the policy replaces
- spending
- Essential monthly outgoings
- rate
- Premium per 100 of monthly benefit
How to check the result by hand
- 1
Find your monthly income to protect
Use gross monthly pay, since the policy replaces a percentage of it. Include regular bonuses only if they are contractually stable.
- 2
Apply the coverage percentage
Multiply income by the share the policy replaces, usually around 60%. That is the headline benefit the insurer will quote.
- 3
Check it against essential spending
Total your essential outgoings and subtract any income that would continue. The lower of this gap and the percentage benefit is what you actually need.
- 4
Estimate the premium
Divide the benefit by 100 and multiply by the monthly rate per 100. Rates depend on age, occupation, benefit period and waiting period.
- 5
Match the waiting period to your savings
Choose an elimination period you could fund from your emergency fund, then check what your employer already provides so the two do not overlap.
For worked examples, common mistakes and the limits of this formula, read the full How To Calculate Disability Insurance page.