Life Insurance Needs Calculator
Determine how much coverage you actually need to protect your family's future.
Estimated Coverage Required:
How Much Life Insurance Do You Actually Need?
Choosing a life insurance policy isn't just about picking a round number like $500,000 or $1 million. To ensure your family is fully protected, you must consider your specific financial obligations. A common industry standard is the DIME Method, which stands for Debt, Income, Mortgage, and Education.
Understanding the DIME Method
- Debt: Sum up all personal debts other than your mortgage, including credit cards and car loans.
- Income: Multiply your annual salary by the number of years your family will need financial support (usually until your youngest child graduates).
- Mortgage: Include the total payoff amount for your primary residence.
- Education: Estimate the cost of college for each of your children.
Realistic Example
Imagine a 35-year-old earning $75,000 a year with two young children and a $300,000 mortgage. To maintain the family's lifestyle for 20 years, they might need:
| Income Replacement (10 years) | $750,000 |
| Mortgage Payoff | $300,000 |
| College Savings (2 kids) | $200,000 |
| Total Need | $1,250,000 |
Don't Forget Assets
If you already have a 401(k), existing group life insurance through your employer, or significant savings, you can subtract these from your total need. This calculator helps you account for those existing buffers so you don't overpay for coverage you don't require.