Life Insurance Calculator
Figure out how much life insurance coverage your family actually needs. This calculator uses the DIME method: Debt, Income replacement, Mortgage, and Education. Enter your financial details and see a clear breakdown of recommended coverage.
The DIME method is one of the simplest ways to estimate life insurance needs. It adds up four categories:
- D - Debt: All debts your family would need to pay off, including car loans, student loans, credit cards, and final expenses (funeral, legal fees).
- I - Income: Your annual income multiplied by the number of years your family would need support. If you earn $75,000 and want 15 years of replacement, that is $1,125,000.
- M - Mortgage: The remaining balance on your home loan so your family can stay in the house.
- E - Education: Estimated college costs for each child. The average cost of 4 years at a public university is around $100,000 including room and board.
Using the default values, the total DIME need is about $1,415,000. After subtracting $50,000 in savings, you would want around $1,365,000 in life insurance coverage.
Term vs. Permanent Life Insurance
For most families, term life insurance (10, 20, or 30 years) provides the coverage you need at a fraction of the cost. A healthy 35-year-old can get a 20-year, $1 million term policy for $30-50/month. Permanent (whole life) insurance costs 5-10x more but builds cash value. Most financial advisors recommend "buy term and invest the difference" for the majority of people.