Physician Disability Insurance Calculator

One in four workers will experience a disability before retirement age.¹ For physicians, the financial stakes are higher than any other profession: a $400,000 annual income disabled at age 38 represents nearly $10 million in lost earnings over a 25-year career. Yet most physicians rely on an employer group policy that caps at $10,000–$15,000/month — a fraction of what a high-earning attending needs.

This calculator estimates your monthly coverage gap (what your employer policy leaves exposed) and the approximate cost to fill it with an individual own-occupation policy. Results are illustrative — actual premiums require a carrier quote and depend on health history, gender, state, elimination period, and the specific riders you choose.

Why the 60% replacement target?

Individual disability policies are generally designed to replace 60–70% of pre-disability gross income. The logic is straightforward: if you're disabled, you no longer need to save for retirement (your income stops, so your savings target drops), and your income taxes fall substantially without earned income. The net result is that 60–70% of pre-tax income often replaces most or all of your take-home pay.

This calculator uses 60% as the baseline target. If you want a 65–70% replacement target, increase the recommended benefit accordingly — and note that individual carriers do have per-policy maximums regardless of your income.

Why your employer group policy probably isn't enough

Hospital and health system group LTD plans are almost universally capped — most at $10,000–$15,000/month. For a physician earning $350,000/year, a 60% replacement target is $17,500/month. Even the most generous group plan leaves a $2,500–$7,500/month gap.

Tax treatment: why it matters for your coverage gap

The tax treatment of disability benefits depends entirely on who paid the premiums:

• Employer-paid group premiums → taxable benefits. Under IRC §106, employer-paid LTD premiums are not included in your current income. But under IRC §105(a), benefits you receive are included in gross income. Net result: you get $0.65–$0.68 on the dollar from a $10,000/month group benefit at physician income levels.
• After-tax individual premiums → tax-free benefits. Under IRC §104(a)(3), amounts received under accident or health insurance are excluded from gross income when the employee paid the premiums. Your individual policy benefit comes out 100% tax-free.²

This asymmetry is why some physicians elect to pay their group LTD premiums themselves (if the plan allows it) — converting a taxable benefit stream into a tax-free one at relatively low cost.

Understanding specialty risk class

Disability insurance carriers classify physicians by occupational risk class, which directly drives premiums. While classifications vary by carrier, the general structure maps to how often claims occur and how severe they tend to be by specialty:

Carrier risk class assignments are proprietary — your specialty may be rated differently by Principal vs. Guardian. Always compare quotes from multiple carriers.

What this calculator doesn't include

• Gender. Women typically pay 25–40% more for physician disability coverage due to historically higher claim rates, particularly for musculoskeletal and mental health conditions. This is a material difference — get carrier quotes that reflect your specific situation.
• Health history. Pre-existing conditions can result in exclusion riders (excluding specific body parts or conditions from coverage) or policy declination. Apply for coverage when you are young and healthy — this is the single most actionable piece of advice for residents and early attendings.
• Elimination period choices. The 90-day elimination period used here is the most common physician choice. A 60-day period costs ~15–20% more; a 180-day period costs ~15–20% less. Pair the elimination period with your emergency fund size.
• COLA rider. A 3% cost-of-living adjustment rider inflates your benefit annually once a qualifying claim begins. Over a 20–25 year disability, it materially preserves purchasing power — but adds 15–20% to premiums.
• Future increase option (FIO) / benefit purchase rider. Allows you to increase coverage in the future without new medical underwriting. Critical to buy during residency or early career when income is still growing. See our disability insurance guide for details.
• Business overhead expense (BOE) coverage. Private practice physicians also face ongoing practice overhead if they become disabled. A separate BOE policy covers rent, payroll, and fixed costs while you recover.

When to buy — and why earlier is almost always better

Disability insurance is the one financial product that becomes harder to get and more expensive the longer you wait. Here's the timeline most physicians face:

• During residency: Low income means small coverage amounts, but premiums are lowest here. More importantly, buying now starts the FIO rider clock — you can increase coverage at attending salaries without proving good health again. Guardian and Principal both offer resident/fellow programs with discounted rates and simplified underwriting.
• Early attending (first year): Income jumped, so the protection need is now real. The FIO rider lets you top up from residency coverage levels without re-underwriting. If you didn't buy in residency, buying now is still significantly cheaper than waiting 5 years.
• Mid-career: Premium rates have climbed, but the coverage period to age 65 is also shorter. Run the math with a specialist to decide whether a full benefit-period policy or a shorter-term bridge makes more sense.