How Much Life Insurance Do I Need? (DIME Method + Examples)
Most online quizzes throw out a number like "10× your salary" and call it done. That works for some people and badly underestimates everyone with kids or a mortgage. The DIME method — Debt, Income, Mortgage, Education — gives you a coverage number tied to your actual obligations, not a generic multiplier.
Use the calculator
Life Insurance Needs Calculator
Step-by-step
- 1
Add up your non-mortgage debt (D)
Credit cards, car loans, student loans, personal loans, medical debt. The goal is for your family to clear these without selling assets. If you have $18,000 in cards and a $22,000 car loan, that is $40,000 of D.
- 2
Multiply your income by years of replacement (I)
How many years of your salary should the policy replace? Typical answers: until your youngest child turns 18, or until your spouse reaches retirement. A 35-year-old earning $80,000 with a 5-year-old usually picks 13 years × $80,000 = $1.04M for I.
- 3
Add the mortgage payoff (M)
The current loan balance, not the original amount and not the home value. If you owe $310,000, M = $310,000. This lets your family stay in the house without scrambling for a refi.
- 4
Add education costs per child (E)
In-state public 4-year is roughly $108,000 in 2026 (tuition, fees, room, and board). Private averages closer to $230,000. Pick the school type you actually expect, not the cheapest, and multiply by number of kids.
- 5
Subtract what you already have
Existing employer life insurance, savings, taxable investments, and your spouse's income capacity. If your DIME total is $1.6M and you have $200,000 saved + $150,000 in employer coverage, you need $1.25M in new coverage.
- 6
Round up, do not round down
Coverage is priced in tiers ($500K, $750K, $1M, $1.5M, $2M). Going from $1.25M to $1.5M usually adds $4–$8/month for healthy applicants under 45. The buffer matters more than the savings.
- 7
Buy term, not whole, unless you have a specific reason
For 95% of households, a 20- or 30-year level term policy at 10–15× the price you would pay for whole life is the right answer. Use the calculator on this site to see the cost gap over 20 years.
💡 Tips
- If your spouse stays home, do not put their coverage at zero. Replacing childcare, household management, and lost income capacity typically requires $250,000–$500,000.
- Buy in your 30s if you can. Premiums roughly double every decade for the same coverage and same health rating.
- Get the medical exam version, not no-exam. No-exam policies are 30–80% more expensive for healthy people.
- Lock the policy length to your need date — the year your youngest finishes college or your mortgage pays off, whichever is later.
FAQ
Is 10× my salary a good rule of thumb?
10× works as a fast sanity check but consistently underestimates parents and homeowners. A $90,000 earner with two kids and a mortgage usually needs $1.5–$2M, which is closer to 17–22×. Use DIME for the real number.
Do stay-at-home parents need life insurance?
Yes, usually $250,000–$500,000 of term coverage. Replacing childcare alone runs $20,000–$30,000 per year per child in most US metros. Add household management and the loss of future earning capacity and the number rises fast.
Should I count my employer-provided life insurance?
Yes, but discount it. It usually disappears the day you change jobs, and the typical 1× or 2× salary employer policy is well below DIME for anyone with a family. Treat it as a supplement, not a foundation.
What term length should I pick — 20 or 30 years?
Pick the longer of: years until your youngest is 22, or years until your mortgage is paid. A 32-year-old with a 2-year-old and a 30-year mortgage almost always picks 30-year term.
Is term life cheaper if I quit smoking?
Dramatically. Smokers pay 2.5–3.5× the rate of non-smokers for the same coverage. Most carriers reclassify you after 12 months smoke-free. Apply, then re-shop after a year off cigarettes.
Can I get life insurance with high blood pressure or diabetes?
Almost always yes, with controlled conditions. Type 2 diabetes managed with diet or metformin and an A1C under 7 typically rates Standard or Standard Plus. Use a broker who shops 10+ carriers — rates vary 60% across companies for the same applicant.
Disclaimer. This guide is for general educational and informational purposes only and is not insurance, financial, or legal advice. Coverage needs, premiums, and policy terms vary by insurer, state, and individual circumstances. Confirm details with a licensed insurance agent or your insurer before making coverage decisions. Read our editorial policy.