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How much life insurance do I need? A DIME calculator

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How much life insurance do I need? Add four numbers and subtract two.

The honest answer to "how much do I need?" is a sum, not a rule of thumb. The DIME method, used by planners and regulators alike because it can be checked by hand, adds up Debt, Income replacement, Mortgage and Education, then subtracts what your family already has. The calculator below does exactly that with your figures, shows every line, and stores nothing.

DIME needs calculator

Fill in what you know and leave the rest blank. Nothing is stored, and the result appears below without an email address.

Cards, car loans, medical, personal or business loans you guaranteed
What is still owed on the home, not its value
Take-home or gross, as long as you are consistent
Often the years until the youngest child is independent
Total across all children, in today's dollars
Funeral, burial or cremation and last bills
Money your family could use for these needs
Including coverage through work, which usually ends with the job

What each line means

  • Debt. Everything except the mortgage: credit cards, car loans, medical bills, a personal or business loan you guaranteed. These do not disappear at death; they are paid from the estate before anything passes to heirs.
  • Income. Your annual income multiplied by the years your household would need it. Choose the years from the need, not from a formula: often the years until the youngest child finishes school, or until a spouse reaches their own retirement income.
  • Mortgage. The balance owed, not the home's value. In Monterey County this is usually the largest single line, which is why our mortgage protection page treats it separately.
  • Education. What you would want funded, in today's dollars, across all children.
  • Final expenses. Funeral, burial or cremation and last medical bills. Any funeral home must give you an itemized price list on request, so this line can be a real local number rather than a guess; see final expense insurance.
  • Savings and existing coverage. Subtract what is already there. Count employer group coverage with caution: it usually ends when the job does, and it is rarely portable at a reasonable price.

What the calculator deliberately leaves out

It uses today's dollars throughout: no inflation, no investment growth on the death benefit, no taxes. That keeps the arithmetic checkable, and it is close enough for choosing a face amount. It also ignores Social Security survivor benefits, which can be meaningful for a family with children and which the Social Security Administration can estimate from your record. If those benefits are significant for your household, subtract them from the income line yourself, or bring the question to a conversation.

It is not a recommendation. Two families with the same total need different policies: a need that ends in twenty years points to term life, a need that never ends to whole life, and a need that is only the funeral to a small final expense policy. Our life insurance overview compares them.

Sanity checks before you act on the number

  1. Can the premium be paid every month for the whole term? A policy you keep beats a larger one you drop in year four. If the number is out of reach, buy the term amount you can hold and revisit it.
  2. Is both earners' coverage counted? If two incomes carry the mortgage, run the calculator twice, once for each person.
  3. Does a non-earning spouse need coverage? Usually yes. Replacing childcare, transport and household work has a real cost.
  4. Are the beneficiaries current? The designation on the policy controls who is paid, regardless of a will.
  5. Has anything changed? A birth, a move, a new mortgage or a job change all move the number. Re-run it and tell us; a policy review costs nothing.

Questions people ask about this calculator

Enough to clear your debts and mortgage, replace your income for the years your family would need it, fund the education you intend to, and cover final expenses, minus savings and coverage you already have. The calculator above adds those lines with your own figures.

It is a starting point, not an answer. A multiple ignores your mortgage balance, your children's ages and what you already have. Two households with the same income routinely need very different amounts, which is why the DIME lines are worth filling in.

Count it, but carefully. Group coverage usually ends when the job does and is often one or two times salary, sized to the employer's formula rather than your mortgage. Most families use it as a top-up on a policy they own.

No. The figures stay in the page's memory while you use it and are gone when you reload or close it. Nothing is written to your browser's storage and nothing is sent anywhere.

No. It is a hypothetical illustration of a need, not a price. What a policy costs depends on your age, health, the carrier and the underwriting path, which is why the next step is a real quote from several carriers.

They can reduce the income line for a family with children. The SSA can estimate them from your record; subtract what applies before deciding, or bring the figures to a conversation and we will do it with you.

Ready to talk it through? No cost, no obligation, in English or Spanish.

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Reviewed by Roberto Morales, California Insurance License #0G97165. Next Wave Options is licensed for life and annuity products only and does not provide investment, tax or legal advice.