How this calculator works
The DIME method sizes a policy around the four obligations your family would inherit if your income disappeared tomorrow. We add them up, then subtract what you've already set aside:
- Debt — your non-mortgage debts (credit cards, auto loans, student loans) so your family isn't servicing them on a smaller income.
- Income — your annual income multiplied by the number of years your dependents would rely on it. This is usually the largest piece.
- Mortgage — your outstanding balance, so the family keeps the home free and clear.
- Education — a college fund for each child you'd want to put through school.
From that total we subtract your liquid savings and any life insurance you already hold, because that money is already working for your family. The result is your estimated coverage gap. We round the headline to the nearest $25,000 — life insurance is sold in round increments and pinpoint precision implies more accuracy than any rule of thumb can deliver.
Need = (Income × Years) + Mortgage + Other Debts + (Children × College Fund) + Final Expenses − Savings & Existing Coverage. Floored at zero. This is the standard DIME framework taught by consumer-finance educators; it's a starting estimate, not a guarantee.Common questions
How much life insurance do I really need?
A common starting point is 10–15× your annual income, but that ignores your actual debts and goals. The DIME method is more precise: add up your Debts, Income to replace, Mortgage balance and Education costs for your kids, then subtract savings and any coverage you already have. This calculator does exactly that from the numbers you enter.
What does DIME stand for?
DIME is Debt, Income, Mortgage and Education. It is a widely used framework for sizing a life insurance policy: cover the debts you would leave behind, replace your income for the years your family needs it, pay off the mortgage so they keep the home, and fund your children’s education.
How many years of income should I replace?
Replace income until your dependents are financially independent. A parent of young children often replaces 15–20 years; if your kids are nearly grown or your spouse earns well, 5–10 years may be enough. Adjust the slider to match how long your family would actually rely on your paycheck.
Should I subtract my existing savings and 401(k)?
Subtract liquid assets your family could realistically use — savings, taxable investments and existing life insurance. Be cautious counting retirement accounts your spouse would need for their own retirement, or illiquid assets like home equity. When in doubt, leave them out so you are not under-insured.
Is term or whole life better for this much coverage?
For most people covering a temporary need (income replacement, a mortgage, raising kids), level term life is far cheaper for the same death benefit. Use our term vs. whole life calculator to compare the lifetime cost of each.