Disability Overhead Expense Insurance Calculator

About This Disability Overhead Expense Insurance Calculator

Disability overhead expense (DOE) insurance is designed to help keep your business running if you, as the owner or a key professional, become disabled and cannot work. Instead of replacing your personal income, this type of policy reimburses eligible business expenses so you can continue paying bills while you recover or transition.

This calculator helps you estimate how much monthly DOE coverage you might need by looking at your typical fixed overhead expenses and the percentage of those expenses you would want an insurance policy to cover. The result is an educational estimate you can use as a starting point for conversations with an insurance professional or financial advisor.

Key Concepts and Basic Formula

At a high level, your estimated monthly disability overhead expense coverage is based on two inputs:

• Total monthly fixed overhead expenses – the recurring business costs that continue even if you cannot work.
• Coverage percentage – the share of those expenses you want an insurance policy to reimburse (for example, 80% or 100%).

The simplified formula is:

Estimated Monthly Coverage = Total Monthly Fixed Overhead Expenses × Coverage Percentage

In MathML form, this can be written as:

What Counts as Fixed Business Overhead?

Fixed overhead expenses are the costs that typically continue regardless of how much revenue your business generates. Examples may include:

• Office or clinic rent and common area maintenance fees
• Utilities such as electricity, water, gas, internet, and phone lines
• Non-owner employee wages and payroll taxes
• Business insurance premiums (property, liability, malpractice, etc.)
• Equipment leases and business vehicle leases
• Business loan payments and lines of credit that must be serviced monthly
• Professional dues, subscriptions, and software licenses needed to operate
• Accounting, bookkeeping, and basic administrative services

Variable costs, such as materials, supplies, or sales commissions that fall when revenue drops, are often less central to DOE coverage. Focus primarily on expenses that are both significant and difficult to reduce quickly.

How to Use This Calculator

1. Gather your numbers. Review recent financial statements, bank records, or your bookkeeping system to determine your average monthly fixed overhead over the past 6–12 months.
2. Enter your total monthly fixed overhead expenses. Include all recurring costs you would want help covering if you were disabled and could not work for an extended period.
3. Choose a coverage percentage. Decide what share of those expenses you would want a policy to reimburse. Many owners start around 70%–100%, depending on available cash reserves and risk tolerance.
4. Review the estimated coverage. The calculator will show an estimated monthly benefit amount that may be appropriate for your business based on the numbers you entered.

Worked Example

Imagine a small professional practice with the following monthly fixed expenses:

• Rent and utilities: $4,000
• Staff salaries and payroll taxes: $8,000
• Equipment leases and loan payments: $2,000
• Insurance premiums and subscriptions: $1,000

Total monthly fixed overhead is therefore $15,000. The owner decides they want to cover 80% of these expenses through disability overhead expense insurance, keeping 20% as a buffer they could manage from savings or cost reductions.

Using the formula above:

Estimated Monthly Coverage = $15,000 × 0.80 = $12,000

In this example, the calculator would suggest that a monthly DOE benefit of about $12,000 might be an appropriate starting point for discussions with insurers.

Interpreting Your Results

When you see your calculated estimate:

• Compare it to your current coverage. If you already have a disability overhead expense policy, check whether the policy's monthly benefit is above or below the calculator's estimate.
• Consider your cash reserves. A business with substantial emergency savings may choose a lower coverage percentage, while a business with thin reserves may prefer closer to full coverage.
• Think about benefit period and waiting period. The longer the benefit period and the shorter the waiting period, the higher premiums may be. The calculator does not adjust for these policy features, so review them separately with an advisor.
• Revisit your numbers over time. As your business grows or your cost structure changes, your overhead and coverage needs may also change. It can be helpful to rerun the calculation annually.

How DOE Insurance Compares to Other Coverage Types

Business owners often mix DOE insurance with other forms of protection. The table below highlights some high-level differences.

Assumptions and Limitations

This calculator is a simplified planning aid and uses basic arithmetic to estimate a potential monthly DOE benefit. Important assumptions and limitations include:

• Estimate only. The output is an approximation based on the information you enter. It does not guarantee eligibility, premium levels, or actual benefit amounts.
• No underwriting factors. The tool does not consider age, health status, occupation, claims history, or insurer underwriting criteria, all of which affect real-world policy offers.
• Fixed costs focus. The calculation focuses on fixed overhead costs and assumes that variable costs can be reduced if revenue falls. Your actual expense mix may be more complex.
• No taxes, inflation, or policy features. The estimate does not adjust for tax treatment, future cost increases, elimination periods, maximum benefit periods, or carrier-specific caps.
• Not financial, legal, or tax advice. The calculator is for educational purposes only and is not a substitute for personalized advice from a licensed insurance professional, accountant, or attorney.

You should verify all figures against your financial records and review any coverage decisions with a qualified advisor before purchasing or changing a policy.

Next Steps After Using the Calculator

After you have an estimated monthly DOE coverage amount:

• Review whether you have included all significant fixed overhead expenses and excluded purely personal costs.
• Compare your estimate to any existing DOE or related business insurance coverage.
• Request quotes from multiple insurers, sharing your estimated coverage need and business financials.
• Discuss options for benefit period, waiting period, and riders that may be appropriate for your profession and risk profile.

Used thoughtfully, this calculator can help you arrive at a realistic starting point for disability overhead expense insurance discussions, but the final decision should be based on a detailed review of your business and professional guidance.