How much disability insurance coverage do I actually need?

Aim to replace roughly 60–70% of your gross income, which is the standard cap most policies allow. Insurers limit coverage to that range on purpose, so you have an incentive to return to work. The key wrinkle is taxes: if your employer pays the premiums, your benefits are taxable, so 60% of gross might only net you 45% after tax. If you pay premiums with after-tax dollars on an individual policy, the benefits come tax-free — making that 60% go much further. Start by listing your essential monthly expenses, then make sure your combined coverage (employer plus any individual policy) clears that number after tax. High earners often max out the group plan's dollar cap and need a supplemental individual policy to reach an adequate percentage. Estimate the gap at wealthserene.com/tools/insurance-calculator before shopping.