The goal of disability insurance is to have 60% of your gross income protected. This is called Income Protection.
GROSS ANNUAL INCOME | 200,000 |
CURRENT MONTHLY BENEFIT | 6,000 |
REQUIRED BENEFIT | 10,000 = 200,000 x .6/12 |
MONTHLY SHORTFALL | 4,000 |
ANNUAL SHORTFALL | 48,000 |
YEARS BEFORE RETIRING | 10 |
TOTAL COVERAGE GAP | 480,000 |