1. What is a Loss of Earning Capacity Calculator?

Definition: This calculator estimates the financial loss due to reduced earning capacity based on expected earnings and a capacity factor.

Purpose: It helps individuals, insurers, and legal professionals quantify potential income loss due to disability, injury, or other capacity-reducing factors.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( LEC \) — Loss of earning capacity (USD)
• \( E \) — Expected earnings (USD)
• \( k \) — Capacity factor (dimensionless, between 0 and 1)

Explanation: The capacity factor represents the remaining earning ability (1 = full capacity, 0 = no capacity).

3. Importance of Loss of Earning Calculation

Details: Accurate calculation helps in financial planning, insurance claims, legal settlements, and disability assessments.

4. Using the Calculator

Tips: Enter expected earnings (annual or lifetime) and capacity factor (default 0.5). Capacity must be between 0 and 1.

5. Frequently Asked Questions (FAQ)

Q1: What does the capacity factor represent?
A: It represents the remaining earning ability, where 1 means full capacity and 0 means complete loss of earning capacity.

Q2: How is expected earnings determined?
A: Based on current income, projected career growth, work life expectancy, and other economic factors.

Q3: When would this calculation be used?
A: In personal injury cases, disability claims, workers' compensation, and long-term financial planning.

Q4: Should taxes be considered in the calculation?
A: Typically calculations use after-tax earnings, but consult a financial expert for specific cases.

Q5: How accurate are these estimates?
A: They provide a baseline estimate but actual losses may vary based on individual circumstances.