How much life insurance do you actually need?
The DIME method adds up what your family would need if your income stopped: Debt, Income replacement, Mortgage and Education. Subtract what you already have, and you get a coverage target you can shop with confidence.
Your situation
What your number is telling you
The four pieces of your need
DIME breakdown
Need vs what you already have
Coverage scorecard
How the number changes with years of income replaced
More years of income to replace means a larger recommended policy. Everything else stays the same.
| Years replaced | Income portion | Total need | Recommended coverage |
|---|
Term life insurance, explained
DIME Method
Debts + Income (years to replace) + Mortgage + Education = needed coverage. This calculator uses a similar approach: replace income for X years, cover all debts, cover final expenses.
Term vs Whole Life
Term life: cheap (under $50/mo for healthy 30-year-old, $500k coverage), expires. Whole life: 10-20× more expensive, includes cash value. For pure protection, term is the right answer.
When to Buy Term Life
When others depend on your income. Single with no dependents = minimal need (just enough for funeral and debts). Married with kids = full coverage. Empty nest = reduce or drop coverage.
How Long a Term
Match term length to financial obligations. Young parents: 20-30 year term covers kids to adulthood. Mortgage holder: term length to mortgage payoff. Once obligations end, term can lapse.
Common questions
How much life insurance do I need?
Rule of thumb: 10× annual income. More accurate: this calculator's method based on actual obligations and dependents.
Should I get term or whole life?
Term for nearly everyone. Whole life is rarely the right choice, high cost and embedded investment underperforms separate term + low-cost index funds.
What term length to choose?
20-year term covers most life events. 30-year if young with new mortgage. Match to time until kids independent and mortgage paid.
Do I need coverage if my employer provides some?
Probably yes, employer coverage is often only 1-2× salary, far less than the 10× target. Plus you lose it if you change jobs.
When can I drop life insurance?
When you reach FI (financial independence), dependents are grown, debts paid. Insurance is for replacing income; once income isn't needed, neither is insurance.
Estimates for planning only. Your real coverage need depends on your family situation, tax picture, benefits, future income and goals. Talk to a fee-only advisor or a licensed agent before you buy, and shop the actual premium with several insurers.