Income Protection Amount Calculator (2025)
Estimate how much income protection coverage you need to maintain your lifestyle in case of illness, accident, or disability.
The Income Protection Amount Calculator estimates how much financial coverage you would need if you couldn't work due to illness or injury. It helps you find your ideal coverage level, replacement income, and policy duration so you don't face financial hardship during recovery.
Income protection (or disability income insurance) provides regular payments (typically 50–80% of your income) if you become unable to work due to accident or sickness. It's not the same as life insurance, it's designed to replace income while you're alive but temporarily disabled.
Disability Statistics
1 in 4
Americans will experience a disability before age 67 (SSA, 2025)
Income Loss Risk
$40K-$100K
Average income lost during prolonged illness
Most employer sick pay covers only short periods (3–6 months)
Average recovery time for long-term illnesses: 1.5–2.5 years
Savings often cover only 3–4 months of expenses
Use the formula:
Required Coverage = (Monthly Income × Coverage % × Duration) - (Savings + Employer Coverage Contribution)
Example:
• Monthly Income: $5,000
• Coverage %: 70%
• Duration: 12 months
• Savings: 3 months (≈ $15,000)
→ Required Benefit: $27,000
| Policy Type | Duration | Typical Benefit | Waiting Period |
|---|---|---|---|
| Short-Term Disability | 3–12 months | 50–70% income | 7–14 days |
| Long-Term Disability | 1–5 years (or to retirement) | 60–70% income | 30–90 days |
| Self-Employed Income Protection | 6–24 months | Variable | 14–60 days |
| Accident-Only Policy | Accident-related loss | 50–80% | 7 days |
Elimination Period
How long before payments begin (e.g., 30–90 days).
Benefit Duration
How long you'll receive payments.
Occupation Class
Risk category impacts premiums.
Pre-existing Conditions
Some exclusions may apply.
Inflation Protection Riders
Keeps benefits aligned with living costs.
Case: 35-year-old software engineer
• Monthly income: $6,500
• Expenses: $4,000
• Savings: $10,000
• Employer pays 10% sick leave
Coverage Needed
$84,000
for 2 years
Estimated Premium
$55/month
approximate cost
Monthly Benefit
$4,550
after taxes
This plan would replace $4,550/month of lost income after taxes.
Q1: How much of my income can I insure?
A: Most providers allow 50–80%, depending on your policy and income source.
Q2: What's the ideal benefit period?
A: At least 12–24 months, or longer if you have limited savings.
Q3: Does income protection cover mental health leave?
A: Many modern policies include this, but check provider exclusions.
Q4: Is self-employed income protection different?
A: Yes, premiums are higher since there's no employer coverage fallback.
Q5: Are benefits taxable?
A: It depends, benefits are tax-free if premiums are paid post-tax.
• Social Security Administration (SSA) Disability Statistics 2025
• Forbes Advisor - Income Protection Insurance Guide
• Policygenius - Disability Insurance Analysis
• Bureau of Labor Statistics - Income & Disability Data
• Council for Disability Awareness
• Insurance Information Institute