Disability Insurance Calculator

Your ability to earn an income is probably your largest financial asset, the engine behind every other goal, yet it's the one people most often leave unprotected. Disability income insurance replaces a portion of your paycheck if illness or injury keeps you from working, but policies vary widely in how much they cover and whether the benefit keeps pace with inflation.

This calculator projects your rising income against the benefit your policy would pay, year by year to retirement, so you can see how much of your lifetime earning power is actually protected, and how much is exposed.

How does this calculator work?

Enter your start and retirement age, your current annual income and the rate it's expected to grow, the monthly income protection your disability policy provides, and the annual cost-of-living adjustment (COLA) applied to that benefit.

The calculator projects, year by year from your start age through retirement, your rising income alongside the disability benefit your policy would pay, each compounding annually at its own rate.

It then totals the lifetime value of your income (with and without raises) against the income your disability insurance protects (with and without COLA), so you can see how much of your lifetime earning power is actually covered.

Worked example

A 35-year-old earning $80,000 (growing 3%/yr) to age 65, with a policy paying $4,000/month and a 2% COLA.

Current income

$80,000/yr

Monthly benefit

$4,000 ($48,000/yr)

Initial replacement ratio

60%

Lifetime income (age 35 to 65)

$4,000,214

Lifetime income protected

$2,034,213

Coverage gap

$1,966,001

How the numbers work

The benefit replaces a share of income equal to the annual benefit over current income: $4,000 × 12 = $48,000, divided by $80,000, is a 60% replacement ratio today.

But the two figures grow at different rates: income at 3% a year, the benefit's COLA at only 2%. Each year the benefit falls a little further behind, so that 60% ratio quietly erodes over the decades to retirement.

Summed from age 35 to 65, the $4,000,214 you'd earn dwarfs the $2,034,213 the policy would pay, leaving $1,966,001 of lifetime earning power unprotected.

The $48,000 benefit replaces 60% of today's income, but as raises lift earnings and a low COLA lags behind, that ratio erodes over the decades, falling to 44.8% by age 65 and leaving a widening gap between what you'd earn and what the policy pays.

Over a 30-year career the income at stake runs into the millions, which is why disability coverage often protects more total value than life insurance. If a gap like this shows up, run the numbers through our budget calculator to see how a reduced income would affect your monthly expenses.