Inputs
Graph
Example Data Table
| Profile | Income / mo | Expenses / mo | Offsets / mo | Replacement % | Recommended | Premium est. |
|---|---|---|---|---|---|---|
| Early career | 4,200 | 2,700 | 0 | 60 | 2,500 | ~55 |
| Family budget | 6,800 | 4,600 | 300 | 65 | 4,200 | ~135 |
| High earner | 12,000 | 7,800 | 800 | 55 | 6,000 | ~410 |
Formula Used
- Needs-based monthly amount (gross) = max( Essential Expenses − Other Income, 0 )
- Offsets total = Social Offset + Workers Comp Offset + Other Offsets
- Needs after offsets = max( Needs-based amount − Offsets total, 0 )
- Income-replacement target = Gross Monthly Income × (Replacement Rate ÷ 100)
- Target after policy max = min( Income-replacement target, Policy Max )
- Recommended benefit = min( Needs after offsets, Target after policy max )
- Net benefit = Gross benefit × (1 − Tax Rate) when taxable; otherwise equals gross benefit
- Elimination funding need ≈ Needs after offsets × (Elimination Days ÷ 30.4375)
- Effective years blends benefit years with mental/nervous limitation using probability weight
- Expected value factor blends full vs partial payouts when residual rider is enabled
- PV of benefits = Σ ( Benefitt ÷ (1+Discount Rate)t/12 ), with COLA and EV factors
How to Use This Calculator
- Enter income, expenses, and any other income sources.
- Add offsets that would reduce payable benefits, if applicable.
- Set benefit period, elimination period, savings, and inflation.
- Choose taxability assumptions to view gross and net results.
- Toggle riders and scenario weights to compare design tradeoffs.
- Press Calculate, then save scenarios for side-by-side review.
Insights
Income Replacement Benchmarks
Most disability plans aim to replace 50–70% of income because benefits may be non-taxable and work expenses fall. This calculator models a target benefit from your chosen replacement rate, then applies any policy maximum. Use this to test how a 55% versus 65% rate changes protection and premium estimates. If your income is 5,000 per month, a 60% target equals 3,000 before caps.
Expense and Offset Mapping
Budget-driven coverage starts with essential expenses, then subtracts other income and benefit offsets. Offsets commonly include social insurance, workers compensation, and other coordinated payments. The “needs after offsets” value helps you see whether you are double-counting income or expecting benefits that may reduce one another. For example, 3,200 expenses minus 200 other income and 300 offsets leaves 2,700 of modeled need.
Elimination Period Liquidity
Waiting periods shift risk from the insurer to your savings. The elimination funding need is approximated as needs after offsets multiplied by elimination days divided by 30.4375. Compare 30, 90, and 180 days to quantify how much emergency cash is required and whether your savings create a shortfall. A 90‑day wait is roughly 2.96 months, so a 2,700 need implies 7,992 in bridge funding.
Inflation and Present Value
COLA grows benefits annually, while expense inflation grows your monthly need. The chart projects both series by year, helping you spot widening gaps over time. Present value discounts future payments using the discount rate, translating a benefit stream into today’s value for easier scenario comparison. With 2% COLA and 3% discounting, later payments contribute less to PV than early payments, even when benefits rise.
Premium Sensitivity Drivers
The premium estimator is an illustrative model for comparing options, not a quote. Age bands, occupation class, smoking status, selected riders, underwriting load, and group discounts all affect results. Small rider choices can add 6–10% each, while group discounts can reduce modeled cost by up to 35%. Use scenarios to compare base, COLA, and own-occupation designs against your coverage gap.
FAQs
1) Why does the calculator cap the recommended benefit?
It uses the smaller of your needs after offsets and your income-replacement target after any policy maximum. This shows whether your budget requires more than typical coverage limits may allow.
2) What should I enter as offsets?
Include recurring benefits that could reduce payable disability benefits, such as social insurance, workers compensation, or coordinated employer benefits. If you are unsure, set offsets to zero and run a second scenario with estimated values.
3) How is the elimination shortfall calculated?
The model converts elimination days to months using 30.4375 days per month, multiplies by needs after offsets, then subtracts your available savings. A positive number suggests you may need more liquidity.
4) What does “PV of benefits” mean here?
PV discounts future projected monthly benefits back to today using your discount rate, while COLA can increase future payments. It helps compare two benefit periods or rider designs on a consistent present-value basis.
5) How accurate is the premium estimate?
It is a scenario tool, not an insurer quote. It applies age bands, occupation class, smoking, rider loads, underwriting load, and group discount heuristics so you can compare relative cost changes across designs.
6) What happens when I save scenarios?
Saved scenarios are stored in your session and displayed in the comparison table. They help you compare recommended benefit, gaps, elimination shortfall, PV, and premium estimate across up to eight saved runs.