What percentage of my income does disability insurance actually replace?

Individual long-term disability policies typically replace about 60% of your gross income, and insurers cap coverage there deliberately so you keep an incentive to return to work. Employer-provided group plans often replace 50% to 60% of base salary, sometimes excluding bonuses and commissions. A key tax wrinkle drives the real number: if your employer pays the premium, benefits are taxable, so 60% of gross may net closer to 40% after taxes; but if you pay the premium with after-tax dollars (as with an individual policy), the benefits arrive tax-free. That difference is why many high earners buy a personal policy on top of group coverage. Total coverage from all sources is usually limited to around 60% to 70% of income.