Life Insurance Calculator
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The DIME method adds up Debt, Income to replace, the Mortgage and Education costs, then subtracts what you already have. With $15,000 of debt, $60,000 of income for 10 years, a $250,000 mortgage, $80,000 for education and $10,000 of final costs, minus $50,000 of savings and $100,000 of existing cover, you need about $805,000.
Car loans, credit cards, student and personal loans.
Funeral and end-of-life costs.
Including group cover through work.
| DIME needs | |
| Debt and final expenses | $25,000 |
| Income ($60,000 × 10 years) | $600,000 |
| Mortgage | $250,000 |
| Education | $80,000 |
| Total needs | $955,000 |
| Already covered | |
| Savings and investments | $50,000 |
| Existing life insurance | $100,000 |
| Result | |
| Additional coverage needed | $805,000 |
| Rule of thumb: 10 × income | $600,000 |
Show steps
- Needs = debt $25,000 + income $600,000 + mortgage $250,000 + education $80,000 = $955,000.
- Subtract what you have: $955,000 − $150,000 = $805,000.
How to use the calculator
- Enter debts your family would have to pay, final expenses, the income they would need and for how many years, the mortgage balance and future education costs.
- Enter savings they could use and any life insurance you already have, including cover through work.
- Press Calculate to see the gap.
The DIME method
| Letter | Stands for | What to include |
|---|---|---|
| D | Debt | Loans and cards, plus final expenses |
| I | Income | Yearly income × the years your family would need it |
| M | Mortgage | The amount left to pay on your home |
| E | Education | College or school costs for your children |
Coverage = D + I + M + E − savings − existing insurance. A quicker rule of thumb is 10 to 12 times your yearly income, but it ignores your actual debts and savings.
Term or permanent?
Term life covers a set period, such as 20 or 30 years, and costs much less for the same amount, which fits needs that end, like a mortgage or raising children. Permanent life (whole or universal) lasts for life and builds cash value but costs several times more. Many families choose a term long enough to last until the children are grown and the mortgage is paid.
Life insurance practice questions
Test yourself with 6 multiple-choice questions. Choose an answer and press Submit to see if you are right and why. Your score appears at the end.
Term life only covers a set period and builds no cash value, so premiums are much lower.
Quiz complete
Frequently asked questions
How much life insurance do I need?
A common approach is the DIME method: add your debts, the income your family would need for some years, your mortgage and education costs, then subtract savings and existing cover.
Is 10 times my salary enough?
It is a quick starting point. People with a large mortgage, young children or little savings often need more; people with few debts and grown children may need less.
Should stay-at-home parents have life insurance?
Often yes. Replacing childcare, cooking, driving and other unpaid work costs money, so many planners suggest cover for a stay-at-home parent too.
Does group life insurance from work count?
Yes, but it usually ends if you leave the job, and it is often only 1 or 2 times your salary, so many people add their own term policy.
Sources
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