Long-Term Disability Insurance Calculator

Why You Need Long-Term Disability Insurance

The Social Security Administration estimates roughly 1 in 4 of today's 20-year-olds will become disabled before age 67 (source: ssa.gov disability stats). Most disabilities are not the result of accidents — they come from cancer, musculoskeletal issues, mental health, and chronic illness. LTD insurance replaces a portion of your income when you cannot work due to illness or injury, typically for several years or to retirement age.

Most Americans rely on either employer-provided group LTD or have no coverage at all. Group plans are good but rarely sufficient: they typically cover 50-66% of base salary (excluding bonuses and commissions), are capped at $5,000-$15,000/month, and benefits are taxable since the employer pays the premium. After tax, group LTD often replaces only 35-45% of true take-home income — leaving a serious gap during a long disability.

Own-Occupation vs Any-Occupation

Two key definitions of disability: own-occupation means you cannot perform the duties of your specific job (e.g., a surgeon who cannot operate but could teach is still "disabled"). Any-occupation requires you cannot perform any reasonable job for which you are educated and experienced. Own-occupation is far more valuable but more expensive. Many group plans use own-occupation for the first 24 months, then switch to any-occupation — a critical detail buried in policy fine print.

Private (individual) LTD policies are usually own-occupation throughout the benefit period. They are also non-cancelable and guaranteed renewable, with non-taxable benefits since you pay premiums with after-tax dollars (source: naic.org).

The Elimination Period — Bridge with Savings

The elimination period is the waiting time between when you become disabled and when benefits start — typically 90, 180, or 365 days. You need liquid savings to cover essential expenses during this gap. A 90-day elimination on $5,000/month expenses requires $15,000 in cash; 180 days requires $30,000.

Longer elimination periods mean cheaper premiums but require more savings. Choose a period you can fund with current savings plus a few months of short-term disability if your employer offers it.

How Much Coverage to Buy

Most experts recommend total coverage (group + private) equal to 60-80% of your true after-tax income. This calculator computes the gap between what your employer plan provides (after tax) and what you actually need to cover essential expenses. Add a small private supplement to bridge the gap, usually 10-25% of additional coverage. Compare with our general disability insurance needs calculator for a different lens.

Last updated April 2026. Sources: ssa.gov, naic.org, iii.org.