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Income protection gap

How much monthly income remains unprotected after policy benefits?

Your numbers

$
$
$

Monthly protection gap

$2,200

Covered share of income66.2%
Annual gap$26,400
Six-month gap to self-fund$13,200

Tip. Employer-paid disability benefits are usually taxable. Enter the net amount if that is what you would live on.

Assumptions

  • Gap = the income you need − the policy benefit − any other income you would still receive.
  • Enter the benefit as the amount you would actually bank. Employer-paid disability benefits are usually taxable, while benefits from a policy you paid for with after-tax money usually are not.
  • Ignores waiting periods and benefit-period limits, which decide whether the benefit arrives in time and how long it lasts.
  • Estimate only. Real policies add exclusions, sub-limits, waiting periods, and network rules that this page does not model.

Sources

  • Industry standard 60% replacement

Explore the numbers

Examples and charts

Start with a scenario, then read the response curve to see which input actually moves the answer.

Example 1

Group cover only

A typical employer policy at 60% of salary, which leaves a real gap.

Monthly protection gap

$2,200

Example 2

Group plus individual policy

A private top-up policy alongside the employer benefit.

Monthly protection gap

$900

Example 3

No cover at all

The exposure most people have without realising it.

Monthly protection gap

$6,100

Sweeps monthly policy benefit from half to one and a half times your value, holding everything else fixed.

Response curve

How monthly policy benefit moves the result

Monthly protection gap

$2,200

$0$1.0k$2.0k$3.0k$4.0k$2.0k$3.0k$4.0k$5.0k
Chart axis: Monthly policy benefitNow $3.9k → $2.2k

What this calculates

Shows how much monthly income would still be missing if you could not work, once disability benefits and any other income are counted.

How to use it

  1. Start with monthly income to protect and work down the form, or load an example to begin from a realistic case.
  2. Read the headline result alongside the supporting rows, which show the intermediate figures behind it.
  3. Check the assumptions. They decide what the number includes and, more importantly, what it leaves out.
  4. Sweep monthly policy benefit on the response curve to see how much it actually moves the answer.
  5. Run a cautious case as well as an optimistic one before using the estimate in a decision.

Common mistakes

  • Entering the gross benefit when the policy's payments would be taxed.
  • Assuming Social Security disability arrives quickly and reliably.
  • Forgetting that a group policy usually ends when the job does.

Formula

Gap = income to protect − policy benefit − other income

Inputs

  • Monthly income to protect
  • Monthly policy benefit
  • Other monthly income if disabled

FAQ

What is own-occupation versus any-occupation?

Own-occupation pays if you cannot do your own job. Any-occupation pays only if you cannot do any job you are reasonably suited to, which is a much harder test. The definition matters more than the benefit amount.

Is the benefit taxable?

Generally, if your employer paid the premium the benefit is taxable, and if you paid it with after-tax money it usually is not. That difference can be worth 20 to 30% of the benefit.

What about the waiting period?

Most policies have an elimination period of 30 to 180 days before anything pays. Your emergency fund has to cover that entire window, which this page does not model.

Why not rely on Social Security disability?

The eligibility standard is strict, claims are frequently denied on first application, and approval can take a long time. It is a backstop rather than a plan.

How much disability insurance do I need?

A common target is 60 to 70% of gross income, because benefits are usually tax-free when you paid the premiums with after-tax dollars. The gap here is the difference between that target and what you already have.

Is disability insurance worth it for a desk job?

Yes. Long-term disability claims often come from musculoskeletal, cancer, and mental-health conditions that have nothing to do with the work itself.

How long do disability benefits last?

Policies commonly pay until age 65 or 67, or for a fixed period such as 2, 5, or 10 years. The elimination period you choose affects the premium more than most people expect.

Are these numbers financial advice?

No. They are educational estimates based on the inputs and assumptions on this page. Confirm important decisions with a qualified professional and your own documents.

Read the full guideIncome protection vs disability insurance

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