Disability Insurance Calculator: Benefit and Budget Gap

Measure the budget gap left by a private disability insurance benefit. Supply the benefit from a policy or claim estimate, after applicable offsets, and compare it with spending and other income. The calculator separates the unpaid waiting period from the months when benefits are expected.

How to use this tool

1. Enter monthly spending during disability and other after-tax income.
2. Enter the policy benefit after insurer offsets, before any tax.
3. Set the taxable share and effective tax assumption.
4. Enter the unpaid waiting period, benefit months and available cash.

Formula

Net benefit = gross policy benefit × (1 − taxable share × tax rate)

Monthly gap = max(0, spending − other income − net benefit)

Reserve = max(0, spending − other income) × waiting months + monthly gap × benefit months

Percentages become fractions in the formula. Waiting months are a budget assumption; a contract may count service days or use other elimination-period rules. Cash reduces the final funding gap, never below zero. All monthly amounts remain constant, and the benefit period starts after the waiting period.

Example

Monthly spending of $4,000, other income of $500 and a fully taxable $3,000 benefit at 20% tax leave $2,400 net benefit and a $1,100 monthly gap. Three unpaid months require $10,500. Another 24 benefit months require $26,400, so total reserves are $36,900. With $5,000 available, additional funding is $31,900.