How Much Life Insurance Do I Need? A Plain-English Walkthrough
The fastest answer is "about 10 times your income," and for a single person with no debt that is usually close enough. But the 10x rule quietly ignores your mortgage, your kids' future, and the savings you already have. This walkthrough shows you both the quick rule and the more accurate DIME method, then points you to a calculator and to coverage guidance for your exact age.
Use the calculator
Life Insurance Needs Calculator
Step-by-step
- 1
Start with the 10x rule as a sanity check
Multiply your gross annual income by 10. A $70,000 earner lands at $700,000. This is a reasonable floor, but it assumes your survivors only need to replace income — it does not separately fund a mortgage payoff or college, and it does not credit the savings you already have. Treat 10x as the starting line, not the finish.
- 2
Run the DIME method for a real number
DIME = Debt + Income + Mortgage + Education. Add your non-mortgage debt, plus your income times the number of years you want it replaced, plus your remaining mortgage balance, plus expected education costs per child. A 35-year-old earning $85,000 with a $250,000 mortgage and two kids can easily land near $1.5 million — far above the 10x figure of $850,000.
- 3
Subtract what you already have
Existing employer-provided coverage, savings, and investments reduce the gap. If DIME says $1.5 million and you have $200,000 saved plus $150,000 of group coverage at work, you need about $1.15 million of new individual coverage. Do not lean on the group policy — it usually disappears the day you change jobs.
- 4
Match the term length to your obligations
Buy a level term that lasts at least until your youngest child is financially independent and your mortgage is paid off. For most parents in their 30s, that is a 20- or 30-year term. Our life-insurance-by-age pages list a suggested term and a rough premium estimate for each age from 20 to 70.
- 5
Round up, not down
Coverage is priced in tiers ($500k, $750k, $1M, $1.5M). Moving up one tier usually adds only a few dollars a month for a healthy applicant under 45. The buffer protects against inflation and the costs you forgot to count, so round to the next tier rather than shaving the number.
- 6
Get quotes from several carriers
Rates for the identical applicant routinely vary 40-60% across insurers. Use an independent broker or compare at least three carriers directly, and get the medical-exam version rather than no-exam — for healthy people, no-exam policies cost 30-80% more.
💡 Tips
- Use the free life insurance needs calculator on this site to run the DIME method with your own numbers in under a minute.
- Not sure where your age band falls? See our life insurance by age guidance — coverage, term, and a rough monthly premium for ages 20 through 70.
- Do not zero out coverage on a stay-at-home parent. Replacing childcare and household management typically requires $250,000-$500,000 of term.
- Buy younger if you can. Premiums for the same coverage roughly double every decade, so locking in early is one of the cheapest financial moves available.
FAQ
Is 10 times my income enough life insurance?
It is a decent floor for someone without a mortgage or kids, but it understates the need for most homeowners and parents. The DIME method — which adds mortgage payoff and education costs and subtracts existing assets — usually produces a higher, more accurate figure. Run both and use the larger.
Should I buy term or whole life to hit my coverage number?
For nearly everyone, term. Term costs roughly 8-15x less per dollar of coverage than whole life, so you can actually afford the amount DIME says you need. Whole life only makes sense for specific situations like a special-needs dependent or estate-tax liquidity.
How do I figure out the right amount for my age?
Coverage need usually peaks in your 30s and 40s (mortgage plus young kids) and tapers as assets grow and obligations shrink. Our life-insurance-by-age pages give a coverage estimate, suggested term, and rough premium for each age so you can benchmark your situation.
Does my employer life insurance count toward what I need?
Yes, but discount it heavily. It typically equals only 1-2x salary and ends when you leave the job. Treat it as a supplement and size your individual policy to cover the gap DIME identifies.