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Life Insurance Calculator

Estimate how much life insurance your family would need with the DIME method: debts, years of income, the mortgage and education, minus the coverage and savings you already have.

Maintained by Jairo TunisseLast updated Editorial policy

Your family's needs

Car loans, credit cards, student loans.

Funeral and settling the estate.

How we calculated this

The calculator uses the DIME method. It adds your non-mortgage debts, the income your family would need for a chosen number of years, your mortgage balance and education costs for each child, plus final expenses. It then subtracts existing life coverage and savings, and never shows less than zero.

need = Debt + Income × years + Mortgage + Education + final expenses coverage = max(0, need − existing coverage − savings)

Worked example (default inputs)

D $15,000 + I $70,000 × 10 + M $250,000 + E 2 × $100,000 + final $15,000 need = $1,180,000 − coverage $100,000 − savings $40,000 = $1,040,000 to add

The right amount of life insurance is the money your household would need to stay on its feet without your income. Rules of thumb like "ten times salary" ignore what you actually owe and who depends on you. Adding up the real obligations, then subtracting what is already in place, gives a number you can take to an agent or use to compare term policies.

How the DIME method works

DIME stands for Debt, Income, Mortgage and Education, the four obligations that most often fall on a surviving family. It is a needs-based rule of thumb used by financial planners, not a peer-reviewed study: it builds the estimate from your own obligations instead of a multiple of salary. Debt covers car loans, credit cards, student loans and other balances that would still be due. Income is your annual pay multiplied by the years your family would need support, often until the youngest child finishes school or a spouse reaches retirement. Mortgage is the remaining balance, so the home can be paid off outright. Education is a per-child budget for college or training.

We also add final expenses, such as a funeral and the cost of settling an estate, because they arrive right away. From that total the calculator subtracts life insurance you already have, including coverage through work, and savings or investments your family could use. If what you have already covers the total, the result is zero rather than a negative number.

Worked example: a family with two children

Take a parent earning $70,000 a year with $15,000 of car and card debt, a $250,000 mortgage balance and two children. The family wants ten years of income, $100,000 per child for education and $15,000 for final expenses. The need adds up to $15,000 + $700,000 + $250,000 + $200,000 + $15,000 = $1,180,000.

The parent already has $100,000 of group life insurance through an employer and $40,000 in savings, which together cover $140,000. The coverage to add is $1,040,000, so a $1 million term policy would be the natural round number to quote. Cut the income years from ten to five and the estimate falls to $690,000.

Choosing the inputs

The number of income years is the most important choice, because it multiplies your salary. Many families pick the years until the youngest child turns 18 or 22. Use the take-home income your family actually relies on, not a gross figure inflated by bonuses. Coverage through an employer usually ends when you leave the job, so some people leave it out of the subtraction to be safe. A stay-at-home parent has no salary to replace, but childcare and household costs are real; enter them as the income to replace.

Limits and assumptions

DIME is a quick needs estimate, not an underwriting decision. It works in today's dollars and does not model inflation, investment returns on the payout, Social Security survivor benefits, taxes on an estate or the cost of the policy itself. Premiums depend on age, health, the term length and the insurer, so get quotes and ask a licensed agent to review your situation before you buy.

Key terms

Death benefit
The amount a life insurance policy pays to your beneficiaries when you die.
Term life insurance
Coverage for a fixed period, such as 20 or 30 years. It is usually the cheapest way to buy a large death benefit.
Permanent life insurance
Whole or universal life policies that last for life and build cash value, at a much higher premium than term.
Beneficiary
The person or trust you name to receive the death benefit.
Group life insurance
Coverage offered through an employer, often one or two times salary, that usually ends when you leave the job.

Frequently asked questions

How much life insurance do I need?

A common starting point is the DIME total: your debts, several years of income, your mortgage and education costs, minus existing coverage and savings. With the example inputs on this page, that comes to $1,040,000.

Is ten times my salary enough?

It can be, but it is only a rule of thumb. A family with a large mortgage or several young children may need more; a household with few debts and solid savings may need less. DIME uses your own numbers instead.

Should I count life insurance from work?

You can, but group coverage usually ends when you change jobs, and it is often only one or two times salary. Counting only policies you own gives a more conservative estimate.

How many years of income should I replace?

Many people choose the number of years until their youngest child is independent, or until a spouse could retire. Ten to twenty years is typical for young families.

Does this calculator quote a premium?

No. It estimates the coverage amount only. Premiums depend on your age, health, the policy term and the insurer, so compare quotes once you know the amount.

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