Income Protection Insurance Calculator

Think of your income as the engine that powers your financial life. But when an unexpected illness, injury, or tragedy occurs, that engine can stall. Income protection insurance is designed to be your backup plan. So you can still pay your bills if you’re unable to work due to a disability, and that your family is taken care of financially if you were to pass away.

Disability insurance provides you with a monthly paycheck if you can’t work, while life insurance provides a lump-sum payment to your loved ones. This calculator helps you understand your potential need for both and see how your personal and professional choices affect the cost of coverage.

How to Use the Calculator

1. Begin with the Personal Profile and Career & Financial Profile sections. Enter your details about your age, health, and projected career path. These factors establish the baseline risk for your insurance quotes.
2. Next, go through the Disability Insurance and Life Insurance sections. Experiment with different options, like the waiting period for disability benefits or the length of a term life policy.
3. Once your profiles and policies are configured, click the “Calculate My Protection Needs” button.
4. The results will appear below, showing four key outputs: your estimated disability coverage and its monthly cost, your recommended life insurance coverage, a comparison between Term and Whole Life policies, and the “Invest the Difference” calculation.

Use this tool to see how different career paths, health habits, and policy choices can impact your long-term financial security.

Key Financial Terms

• Benefit Period: The maximum amount of time, chosen when you buy a disability policy, that benefits will be paid for a continuous disability. Common options are 2 years, 5 years, or until a specific age. A longer benefit period results in a higher premium.
• Cost of Living Adjustment (COLA) Rider: An optional add-on to a disability insurance policy that automatically increases the monthly benefit each year while you are on a claim. This helps your benefit payment keep up with inflation, protecting your purchasing power over a long-term disability.
• Own-Occupation defines disability as the inability to perform the main duties of your specific occupation, making it the most favorable coverage for skilled professionals.
• Any-Occupation is a stricter definition, only paying benefits if you are unable to perform any job for which you are reasonably qualified by education, training, or experience.
• Elimination Period: Also known as the waiting period, this is the number of consecutive days you must be disabled before benefits begin. It functions like a policy’s deductible. Common choices are 30, 60, 90, or 180 days. Selecting a longer elimination period will lower your premium.
• Future Increase Option (FIO) Rider: An optional rider that guarantees your right to purchase additional disability coverage in the future, regardless of any changes to your health. This is particularly valuable for students and young professionals whose income is expected to rise significantly.
• Morbidity / Mortality: These are the two types of risk that insurance companies measure. Morbidity is the risk of becoming ill, injured, or disabled. Mortality is the risk of death. Disability insurance is based on morbidity rates, while life insurance is based on mortality rates.
• Occupation Risk Class: A system that insurers use to categorize occupations based on their inherent risk. Sedentary office jobs are in the lowest-risk (and lowest-cost) classes, while jobs involving manual labor or hazardous conditions are in the highest-risk (and highest-cost) classes.
• Premium: The amount of money you pay to an insurance company—typically billed monthly, semi-annually, or annually—to keep your insurance policy active.
• Term Life Insurance: A type of life insurance that provides a death benefit for a fixed period, or “term” (e.g., 10, 20, or 30 years). If the insured person passes away during the term, the policy pays out. If the term ends, the coverage expires. It is the most affordable type of life insurance.
• Underwriting: The process an insurance company uses to evaluate an applicant’s risk. Underwriters review your age, health, occupation, nicotine use, and other factors to determine if they will offer you a policy and at what price.
• Whole Life Insurance: A type of permanent life insurance that provides a death benefit for your entire life, as long as premiums are paid. It also includes a savings component called “cash value” that grows over time. Premiums are substantially higher than for term life insurance.

Getting Income Protection Scenario

Use the Income Protection Calculator to input the following example scenario and establish your baseline results. This will be your starting point for the quiz questions that follow.

Personal Profile

• Current Age: 25
• Gender: Male
• Self-Reported Health: Excellent
• Nicotine/Tobacco Use: No (never)

Career & Financial Profile

• Projected Occupation Risk Class: Class 4 (Primarily office, some travel/stress)
• Specific Occupation: Marketing Manager
• Projected Starting Salary: $60,000
• Projected Total Debt: $25,000
• Number of Dependents: 0

Disability & Life Insurance Configuration

• Elimination (Waiting) Period: 90 days
• Benefit Period: To Age 67
• Definition of Disability: True Own-Occupation
• Policy Riders: Future Increase Option (FIO) is checked.
• Policy Type: Term Life
• Term Length: 30 Years

Click “Calculate My Protection Needs” and use the results to answer the questions.