Free tool
Disability Income Calculator
If you could not work for a year, what would still come in?
Monthly benefit to add
$1,320
To keep $4,200 a month coming in.
- Income to keep70% of $6,000
- $4,200
- Group plan pays$3,600 before tax
- $2,880
- Other income
- $0
- Monthly benefit to add
- $1,320
- Gap over 30 yearsIf it ran to the benefit age
- $475,200
Insurers cap individual cover at a share of income, and Social Security disability has its own strict rules, so it is left out here.
A nurse hurts her back and is off work for months; the bills keep arriving. This free InsureCard calculator shows how much of your pay a group disability plan would really replace after tax, and the monthly benefit an individual policy would need to add to keep your household running.
Updated
The formula
Income to keep = monthly pay × target share
Group benefit = min(monthly pay × plan share, plan cap), less tax if your employer pays the premium
Benefit to add = Income to keep − group benefit − other income
Many group plans pay a share of pay up to a monthly cap. When your employer pays the premium, the benefit is taxed as income; when you pay it with after-tax money, it is not (IRS Publication 525).
The gap over the years shows what going without the cover could cost if a disability lasted to the benefit age. It is not discounted.
A worked example: $6,000 a month
Someone earns $6,000 a month and wants to keep 70% of it: $4,200. Their employer's plan pays 60% of pay, capped at $5,000: $3,600.
The employer pays the premium, so at 20% tax the benefit is $2,880. That leaves $1,320 a month to cover, or $475,200 if a disability at 35 lasted to 65.
How likely is a disability?
The Social Security Administration's actuaries estimate that an insured worker who turns 20 in 2026 has a 24 percent chance of becoming disabled before normal retirement age (Actuarial Note 2026.6).
Most people insure their car and home without a second thought. Their income, the thing that pays for both, often has only the cover that came with the job.
Why the tax question matters
A plan that pays 60% of pay sounds generous until tax comes off. If your employer pays the premium, a taxed benefit can leave you well under half your usual take-home.
An individual policy you pay for yourself usually pays out tax-free, which is why its benefit can be smaller than the headline gap suggests. Check your plan documents and ask a tax adviser.
Questions
How much disability insurance do I need?
Enough to keep the share of income your household cannot do without, after tax. Take your target, subtract what your group plan pays after tax and any other income that would continue, and the rest is the benefit to add.
Are disability benefits taxable?
It depends on who paid the premium. Benefits from a plan your employer paid for are generally taxable; benefits from a policy you paid with after-tax money generally are not. IRS Publication 525 sets out the rules.
Does Social Security disability cover the gap?
Do not count on it. Social Security disability has a strict definition of disability and a waiting period, so this calculator leaves it out. Add it as other income only if you already receive it.