Income Replacement Ratio
The percentage of your paycheck a disability policy will replace while you are on claim.
What You Need to Know
The income replacement ratio describes how much of your pre-disability pay a policy will cover. Most long-term disability plans replace 50-70% of gross income, subject to a monthly cap.
Aim for a benefit that covers essential expenses—housing, food, insurance, debt payments—so your lifestyle stays afloat during recovery.
Sources & References
This information is sourced from authoritative government and academic institutions:
- dol.gov
https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/employee-retirement-income-security-act
Related Calculators & Tools
Put your knowledge into action with these interactive tools:
Disability Insurance Calculator
Calculate disability insurance coverage needs, estimate premiums, and understand income protection options
Life Insurance Needs Calculator
Determine life insurance coverage using DIME method, income replacement, and comprehensive needs analysis
Related Terms in Healthcare & Insurance
ADLs (Activities of Daily Living)
Six basic self-care tasks—like bathing and dressing—that determine long-term care eligibility.
Any Occupation
Disability coverage that only pays benefits if you cannot work in any reasonable job based on your experience and education.
Assisted Living
Housing for people who need help with daily tasks but not round-the-clock medical care.
Beneficiary
The person, trust, or organization that receives the life insurance payout.
Benefit Period
How long your disability insurance will pay benefits once a qualifying claim is approved.
Cash Value
The savings component inside certain permanent life insurance policies.