Disability Insurance Coverage Gap Calculator

The share of salary your plan replaces, entered as a percentage, so sixty percent is 60%. Sixty is the common figure and the published market range runs from forty to eighty. It is the headline percentage only: the monthly cap can bring the benefit below it, and tax can bring it below again.

The most the plan will pay in a month whatever the percentage works out to. Published figures across the market run from four thousand to twenty five thousand, which is why this is something you read off your own plan document rather than a constant. Above a salary of the cap divided by the replacement share, the cap is what decides your benefit and the percentage stops applying.

What you would still have to pay each month if you could not work: housing, food, utilities, insurance, minimum debt payments and care costs. Leave out what would stop, such as commuting and work clothes, and leave out saving. There is no published average for this, so the figure shown is a convention rather than a measurement: about seventy percent of gross monthly income at the median salary, less a tenth for the spending that falls away while you are not working. Replace it with your own total.

The marginal rate you would pay on a taxable benefit, entered as a percentage, so twenty two percent is 22%. It is applied only where the employer paid the premium. Use the rate on the last dollar of income rather than the average rate across all of it, because a benefit is taxed on top of whatever else you receive.

Optional. What a full individual policy costs each year, as a share of income. Leave it blank and the calculator uses two percent, the middle of the band Guardian and Policygenius both publish, which is one to three percent for a policy replacing about sixty percent of income. Enter your own figure if you have a quote. The price shown is scaled to the partial benefit you actually need, so it is a fraction of that full cost.

Optional. Any other monthly amount you are confident you would receive while disabled: a second policy, a union or association benefit, or Social Security disability if you choose to count it. Leave it blank to count nothing, which is the assumption the calculator ships with. Social Security is deliberately not assumed: the test is whether you can do any work at all, nothing is paid for the first five months, and most initial claims are refused.

How old you are now. It is used only for an age-graded benefit period, where the years paid are the years between now and the age the benefit ends. Choosing a term that ends at or before your current age pays nothing, and the status line says so rather than reporting a total of zero without explanation.

How long the benefit would be paid once it starts. A fixed term of two or five years, or an age-graded term running to sixty five or to sixty seven, which is the normal retirement age for anyone born in 1960 or later. An age-graded term is worth more the younger you are, because it is the years between now and that age.

What you earn in a year before tax. The group plan's benefit is a share of this figure, so everything else follows from it. Use your own earnings rather than a household total: a plan replaces the salary of the person it covers. Bonus and commission are often excluded from the definition a plan uses, so check what your own plan counts before relying on the answer.

Whether your employer pays for the cover. It decides the tax and nothing else, and it is the single largest difference between what a plan advertises and what it delivers: a benefit from a plan the employer paid for is taxable income, and one paid for with money already taxed is not. A premium deducted from your pay before tax counts as employer paid for this purpose.

Optional. Money you could live on during the wait before the benefit starts. Leave it blank and the whole cash requirement is still reported, with nothing set against it; enter a figure and the shortfall is measured from it, and the status line will tell you if it does not stretch far enough. Count only what you could actually reach without penalty, which usually means cash and not a retirement account.

How long you would have to wait after becoming disabled before the plan pays anything. Ninety days is the common choice and the range runs from thirty days to a year. The wait is uninsured by construction, so this choice decides how much cash you need to hold: the longer the wait, the cheaper the cover and the larger the reserve it assumes you have.

The monthly benefit a supplemental policy would actually be written for: the gap, or the ceiling above, whichever is smaller. Where the ceiling is what binds, buying more cover is not possible rather than merely expensive.

The values across the top of the grid: essential spending each month, in steps of two hundred and fifty either side of yours and never below zero. Read a column to hold the spending fixed and vary the salary. The middle entry is your own figure.

That income as a share of your monthly salary. Compare it with the replacement percentage your plan advertises: the difference is the tax, the cap, or both. It is the single most useful number here for judging whether the cover is what you thought it was.

An estimate of what the supplemental cover would cost each month, from a published rule of thumb rather than a rate table: a full policy costs a stated share of income a year and replaces a stated share of it, so a partial benefit costs the same fraction of that full price. It is an estimate and the label says so; a quote engine replaces it, and the real figure depends on age, occupation class, health and the options chosen.

Twelve of those premiums as a share of your annual salary. It is the figure to compare with the one to three percent of income the market publishes for a full policy: a partial benefit should come in well under that band, and if it does not, the cover being priced is close to a full policy.

Machinery, and NOT an input. The same for the column axis: Excel substitutes into it while filling the grid, and the rest of the time it mirrors Essential_Monthly_Expenses.

The body of the grid: the monthly gap, recomputed for every combination of the two axes. One hundred and twenty one cells, each one the whole calculation run again with a different salary and a different level of spending. It is a component of the table rather than a result on its own.

The part of the gap no policy will cover, because the ceiling on total replacement has been reached. Anything above zero here is spending that would have to come from savings, from another earner or from spending less, and no premium will move it.

Machinery, and NOT an input. Excel substitutes each value from the row axis into this cell while it fills the grid; the rest of the time it mirrors Annual_Salary. Change Annual_Salary above, never this: the axis is derived from it, so editing the mirror moves the axis while the table walks and the grid comes out meaningless.

Machinery. Excel requires the formula being tabulated to sit in the grid's top-left corner, where it means nothing to a reader, so it is formatted away. It holds Monthly_Gap.

The values down the left of the grid: the annual salary, in steps of ten thousand either side of yours and never below zero. Read a row to hold the salary fixed and vary the spending. The middle entry is your own salary.

How much of that cash you would be short. With the savings line left blank it is the whole requirement, because nothing has been set against it; enter your savings and it falls to what they do not cover. The status line warns about this only where you entered a figure, since a warning about a number you never gave would be about the calculator rather than about you.

What the plan would pay each month before any tax, which is the replacement percentage applied to your monthly salary, or the monthly cap if that is smaller.

The cash the wait would consume before any benefit arrives: essential spending for the days in the elimination period. Nothing insures this period by construction, which is what makes a longer wait cheaper. Short-term disability cover, where an employer offers it, is what usually fills it, and it is not modelled here.

Everything the group plan, any other benefit and the supplemental policy would pay in total over those years, in the money of the day with no discounting and no increase for inflation. It is the scale of what is at stake rather than a present value, and it assumes a claim is paid from the start of the benefit period to the end of it.

How many years the benefit would be paid: the fixed term you chose, or the years between your age and the age the term ends. Zero means the term you chose ends at or before your current age, so nothing would be paid.

What would actually arrive each month. Where the employer paid the premium the benefit is taxable income and your marginal rate has been taken off; where the premium was paid with money already taxed this equals the gross figure. The distance between the two lines is why a plan described as replacing sixty percent of income often replaces closer to forty seven.

What essential spending exceeds that income by each month. Zero means the cover is already enough for the spending you entered. This is the figure a supplemental policy would be bought to close, and the one the grid at the foot recomputes across salaries and spending levels.

Your annual salary divided by twelve. Everything the plan pays is a share of this figure, and it is also the base the ceiling on total cover is measured against.

Reads OK, or explains why the inputs are not valid or why the answer deserves a second look. The warnings are in a fixed order, so where more than one applies the first is the one shown.

The benefit after tax plus any other monthly benefit you entered. This is the whole of what would arrive each month, and it is what the gap is measured from.

The largest monthly benefit a supplemental individual policy could add. Insurers limit total replacement across every policy a person holds to a share of income, so this is that share of your monthly salary less the group benefit before tax. It is measured on the benefit before tax because that is the cover already in force, whatever the tax does to it afterwards.