Life Insurance Needs Calculator
Estimate how much life insurance coverage your dependents would need using the DIME method: Debt, Income replacement, Mortgage, and Education.
What this calculator does
Estimates how much life insurance coverage your dependents would actually need, using the DIME method — a more tailored approach than a flat "10x salary" rule of thumb.
Who this is for
Anyone with dependents (a spouse, children, or other family members relying on their income) shopping for term life insurance, or reviewing existing coverage after a major life change like a new mortgage or child.
How this calculator works
The DIME method adds four components: your non-mortgage Debt, the number of years of Income you want replaced (annual income × years), your remaining Mortgage balance, and future Education costs for your children. Existing liquid savings and any current life insurance are then subtracted, since your dependents could draw on those first. The result is a rough target for how much total coverage to carry, combining any employer-provided policy with a personal term policy.
Worked example
$15,000 non-mortgage debt, $60,000 annual income replaced for 10 years ($600,000), a $200,000 remaining mortgage, and $40,000 in future education costs: D+I+M+E = 15,000 + 600,000 + 200,000 + 40,000 = $855,000. Subtracting $10,000 in existing savings and coverage: $845,000 in additional coverage needed — notice how much larger this is than a flat "10x salary" rule (which would suggest just $600,000), since DIME captures the mortgage and education costs a flat multiple misses entirely.
Where the number comes from
Run the calculator above to see the DIME breakdown.
Common mistakes
- Using a flat income multiple instead of your real numbers. "10x salary" rules of thumb ignore your actual mortgage balance, number of kids, and existing savings — DIME tailors the estimate to your situation.
- Forgetting to update coverage after big life events. A new mortgage, a new child, or paying off debt all shift the right coverage amount — recalculate after any major change.
- Double-counting employer coverage. If your employer already provides 1–2x salary in group life insurance, subtract that from your total need before buying a personal policy.
- Underestimating future education costs. Education costs tend to rise over time — if your children are young, the eventual cost may be meaningfully higher than today's tuition figures suggest.
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Frequently Asked Questions
Why does DIME suggest so much more coverage than a "10x salary" rule?
A flat income multiple only accounts for income replacement, missing your mortgage balance and future education costs entirely. DIME adds all four components together, which for homeowners with children typically produces a meaningfully higher, more realistic coverage target.
What is the DIME method?
DIME stands for Debt, Income replacement, Mortgage, and Education — you add up all four to estimate the lump sum your dependents would need if you died, then subtract existing savings and coverage.
Is this the only way to estimate coverage?
No, some advisors use a simpler income multiple (10–15x annual income). DIME tends to produce a more tailored number because it accounts for your actual debts and dependents rather than a flat multiple.
Should I subtract my existing savings?
Yes — liquid savings and any existing life insurance coverage reduce the new coverage you need, since your dependents could draw on those first.