Disability Insurance Replacement Ratio Calculator
Calculate how much income you need to replace if you become disabled, your current coverage gap, and the estimated cost of individual disability insurance to close that gap. Based on III.org methodology.
What Is the Disability Income Replacement Ratio?
The disability income replacement ratio measures what percentage of your pre-disability gross income your coverage replaces if you become unable to work. The Insurance Information Institute (III.org) recommends a target of 60–70% of gross income. For most employees with employer-sponsored long-term disability (LTD) insurance, the group plan covers 60% of base salary — but caps benefits at $5,000–$10,000/month, creating a significant gap for higher earners. A worker earning $200,000/year may receive only $7,200/month ($86,400/year) from a 60% group plan capped at $7,200/month — a replacement ratio of just 43%. Source: Insurance Information Institute (III.org). Last updated: May 2026.
Replacement Ratio Benchmarks
| Replacement Ratio | Assessment | Action |
|---|---|---|
| 70%+ of gross income | Well covered | Review benefit period and definition of disability |
| 60–70% | Adequately covered | Consider supplemental coverage for expenses + savings |
| 40–60% | Gap exists | Purchase individual DI to bridge the gap |
| Below 40% | Serious gap | Prioritize individual DI — high financial risk |
How to Buy Individual Disability Insurance
Individual disability insurance (IDI) is purchased outside of your employer and is fully portable — it moves with you if you change jobs. Policies are defined by occupation class (1–5A), benefit period (2 years, 5 years, to age 65, to age 67), and elimination period (30, 60, 90, or 180 days of disability before benefits begin). A 90-day elimination period with a to-age-67 benefit period for a professional in occupation class 5A (low risk) costs approximately 1.5–2.5% of covered income annually. Apply while healthy — underwriting is strict and pre-existing conditions may be excluded.