Disability Insurance Calculator
Your ability to earn is probably your largest asset, and most people leave it uninsured. Worse, employer cover is usually taxed, so 60% of pay is not 60% of what reaches you.
Your monthly shortfall
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- Employer cover, on paper
- $0
- What actually reaches you
- $0
- Your own policy adds
- $0
- Total you would receive
- $0
- Essential bills
- $0
Where the money goes
Each block is sized by its share, so you can see whether employer cover or actually reaches you is the bigger part without reading a single number.
Move it and watch
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at {v} for monthly income before tax
And what you can change
Why your own figure may differ
What different levels of cover would leave you
The tax on employer-paid cover is what turns a comfortable-looking percentage into a shortfall.
| Cover | On paper | After tax | Against your bills |
|---|
Employer cover is your income times the share covered. If the employer pays the premium the benefit is normally taxable, so the amount that reaches you is that figure less your tax rate. A policy you pay for yourself normally arrives tax free.
Disability insurance: real examples
Three situations. Click any card to load it.
- The taxable surprise
Employer cover at 60%
Employer pays the premium, so the benefit is taxed.
60% of pay becomes $2,772 a month after tax, against $3,500 of essential bills. A $728 gap nobody warned you about.
Load this scenario in the calculator → - Paying it yourself
The same cover, premium paid by you
Now the benefit arrives tax free.
The same 60% is worth $3,600. enough to cover the bills. Who pays the premium is worth more than most people realise.
Load this scenario in the calculator → - Topping it up
Adding your own policy
A private policy on top of the employer one.
The gap closes. Buying only the shortfall is far cheaper than replacing cover you already have.
Load this scenario in the calculator →
Common questions about disability insurance
Why does disability cover matter more than people think?
Because your ability to earn is almost certainly your largest asset. Someone thirty years from retirement earning a normal salary will earn millions over their career. Most people insure a car worth a fraction of that and leave the earning power uninsured.
Does my employer policy cover me?
Often only partly, and often less than it looks. Employer cover is typically a share of base salary, may exclude bonus and commission, and usually stops when you leave the job. Crucially, if the employer pays the premium, the benefit is normally taxable - so the real figure is lower than the headline.
Why does it matter who pays the premium?
It decides whether the benefit is taxed. If your employer pays, you generally pay tax on what you receive. If you pay from your own after-tax money, the benefit is normally tax free. That difference can be worth a fifth or more of the payout.
What is own occupation cover?
It pays if you cannot do your own job, rather than any job at all. It costs more and is worth understanding before you need it. A surgeon who cannot operate but could work at a desk gets nothing under the narrower kind.
What is an elimination period?
The wait before payments start, often 90 days. A longer wait means a cheaper premium, but you must be able to survive that gap on savings. Match it honestly to your emergency fund rather than choosing the cheapest.
How much cover should I aim for?
Enough to cover your essential outgoings, not your entire income. Insurers usually cap cover well below full pay on purpose. Work out what you must cover, count what you already have, and insure the gap.