Glossary
Income replacement is the share of a person's earnings that insurance is meant to restore if they die or can no longer work. In life insurance it is usually expressed as a number of years of income; in disability insurance it is a percentage of monthly pay, since benefits rarely replace every dollar.
The phrase means slightly different things depending on the line. A life agent thinks in lump sums that will be drawn down over years, while a disability agent thinks in a monthly check capped by carrier participation limits. Clarifying which one the prospect means is often the first useful thing a producer can do.
In the life calculator, Years of Income to Replace multiplies Annual Income into the Income Replacement result. In the disability insurance calculator, Income to Replace (%) sets a Target Monthly Benefit, which is then compared with existing benefits and Monthly Essential Expenses to show any shortfall.
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