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Calculate exactly how much life insurance coverage your family needs using the industry-standard **DIME formula** (Debt, Income, Mortgage, Education).
Step-by-step breakdown of the underlying equations.
The Life Insurance Coverage Estimator uses the industry-standard DIME formula to calculate how much life insurance your family needs. DIME accounts for: Debt (consumer debt), Income replacement, Mortgage payoff, and Education funding.
This comprehensive approach ensures your family can maintain their lifestyle, pay off the home, eliminate debts, and fund children's education—even if you're no longer there to provide.
Scenario: Michael, 35, earns $80,000/year. He has $50,000 in debt, a $250,000 mortgage, and wants to fund $100,000 for his two kids' college.
Cost context: A healthy 35-year-old can typically get a $1.2M 20-year term policy for $50-80/month.
Next step: Get quotes from multiple insurers. Consider "laddering" policies (e.g., 10-year + 20-year terms) to match when you'll need different coverage levels.
DIME stands for Debt, Income, Mortgage, and Education. It's a comprehensive method to calculate life insurance needs: add all debts, multiply annual income by years of replacement needed, add mortgage balance, and add children's education costs. The total is your minimum recommended coverage.
Common recommendations range from 5-10 years, depending on your family situation. Consider: how long until your spouse can increase their income, when children will be independent, and whether your spouse has retirement savings. Single-income families with young children often need 10+ years of replacement.
Mortgage insurance only covers the loan—it doesn't provide additional funds for your family's ongoing expenses. Including the mortgage in your life insurance calculation ensures your family can choose: pay off the house OR invest the money and continue payments if that's financially better.
Term life is much cheaper and covers you for a specific period (10-30 years)—ideal for covering your working years when dependents need protection. Whole life costs 5-15× more but builds cash value and lasts forever. Most financial advisors recommend term life and investing the premium difference.
Review annually or after major life events: marriage, divorce, new child, home purchase, salary increase, or inheritance. Your coverage needs change significantly over time—new parents need more coverage, while empty nesters with paid-off homes may need less.