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Ask an insurance agent how much disability insurance you need and you will hear “as much as you can get.” That is sales talk. The real answer comes from your own budget, because disability insurance is meant to replace the income your household actually depends on, not your full salary.
Start with what you spend, not what you earn
Insurers cap benefits at 60 to 70 percent of gross income, and that ceiling exists for a reason: disability benefits are supposed to keep you afloat, not make disability pay better than working. For most households, 60 percent of gross income roughly equals take-home pay after taxes, retirement contributions, and work-related costs disappear. That is the number to sanity-check against.
Add up the monthly spending that continues whether or not you are working:
- Housing: mortgage or rent, property tax, insurance, HOA
- Debt minimums: car loans, student loans, credit cards
- Insurance premiums you must keep paying: health insurance (COBRA or marketplace coverage is expensive), life insurance, the disability policy itself
- Food, utilities, transportation, childcare
- Out-of-pocket medical costs, which usually rise during a disability
Then subtract income that continues without you working: a spouse’s earnings, rental income, investment income. The gap between those two numbers is the monthly benefit you actually need. For many families it lands close to that 60 percent mark. For single-income households with a mortgage, it can be higher. For dual-income households with modest fixed costs, it can be lower.
Do not count on Social Security to close the gap
Social Security Disability Insurance is a real program that pays real money, but it is not sized to replace a salary. The average SSDI payment for a disabled worker in 2026 is about $1,630 a month, and the maximum is $4,152. Approval takes months, the definition of disability is strict (you must be unable to do any substantial work, and the condition must last at least a year), and only about a third of initial applications are approved. Treat SSDI as a possible bonus, not as part of your plan. If it eventually pays, it reduces pressure. If it does not, you are still covered.
Watch the group-plan cap
This is where employer coverage quietly falls short. A group long-term disability plan that pays “60 percent of salary” sounds complete until you read the monthly maximum. Many group plans cap benefits at $5,000 to $10,000 a month. Someone earning $200,000 a year hears “60 percent” and expects $10,000 a month, but if the plan caps at $6,000, the real replacement rate is 36 percent. High earners are the most likely to need a supplemental individual policy, and the least likely to realize it.
Group benefits are also usually taxable when the employer pays the premium, which shrinks the check further. A $6,000 monthly group benefit taxed as ordinary income might net closer to $4,500. Individual policies you pay for with after-tax dollars pay tax-free benefits, so the face amount is the amount you keep.
Our walkthrough of group disability insurance through work shows how to read your own plan documents for these limits.
The simple formula
Monthly benefit needed = (monthly must-pay expenses + expected medical out-of-pocket) – (continuing household income). Round to the nearest $500. Buy that amount across your group and individual coverage combined, with the individual policy filling whatever the group plan leaves uncovered.
Two guardrails. First, do not overbuy. Insurers will not issue coverage far above 60 to 70 percent of income anyway, because overinsurance creates an incentive to stay disabled. Second, revisit the number every few years or after a major change: a new mortgage, a child, a spouse stopping work. Disability insurance sized for your life at 30 is undersized for your life at 45. The future increase option rider exists for exactly this reason, and it is cheaper to build in the right to buy more later than to wish you had.
Once you know the benefit amount, the next question is what drives the price. See how disability insurance premiums are calculated for the full breakdown.
