How much life insurance is enough? The DIME method adds up your debts, income to replace, mortgage, and future education costs, then subtracts what you already have. Enter your numbers below.
Sample input: Non-mortgage debt ($): 30000, Annual income to replace ($): 80000, Years of income to replace: 10, Mortgage balance ($): 250000, Future education costs ($): 100000, Existing life insurance ($): 200000
Additional coverage needed: 980000 (Significant additional coverage needed)
By the DIME method your family would need about $1,180,000 in total (debt, 10 years of income, mortgage, and education). After your existing $200,000 of coverage, you should consider about $980,000 of additional life insurance.
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DIME stands for Debt, Income, Mortgage, and Education. You add your non-mortgage debt, the income to replace (annual income times the years your family needs it), your mortgage balance, and future education costs, then subtract existing coverage. It is a clear, needs-based way to size life insurance (the Insurance Information Institute (III.org)).
Multiplying income by 10 is a quick rule of thumb, but it ignores your specific debts, mortgage, and education goals. The DIME method is more accurate because it sizes coverage to what your family would actually need to replace (the Insurance Information Institute (III.org)).
Term life covers a set period (such as until the mortgage is paid or the kids are grown) at a much lower cost, which suits most needs-based coverage. Whole life is permanent and far pricier; it is usually for specific estate or lifelong-dependent situations (the Insurance Information Institute (III.org)).
Recalculate after major life events — a new child, a home purchase, a salary change, or paying off debt — since each changes your DIME total. Coverage needs usually fall over time as debts shrink and assets grow.