How to use the Life Insurance calculator
- Enter what your family would need (DIME) details. Fill in debts other than the mortgage, annual income to replace, years of income to replace, mortgage balance, future education costs, final expenses.
- Enter what you already have details. Fill in existing life insurance, savings & investments available.
- Read your results. Results update instantly. The headline shows the additional coverage to consider; the breakdown below show the details.
The DIME method
DIME adds up four needs your family would face:
Coverage gap = Need − existing coverage − available savings
- Debts: car loans, cards, personal loans, plus final expenses.
- Income: years of income your family would need replaced, often until the youngest child is independent.
- Mortgage: the balance, so the family can stay in the home.
- Education: expected college costs for each child.
Term vs. permanent
Term life insurance covers a set period (10–30 years) and is far cheaper per dollar of coverage, which suits most income-replacement needs. Permanent policies add a cash value component at a much higher premium.
Worked example
With these inputs: debts other than the mortgage $25,000; annual income to replace $70,000; years of income to replace 10; mortgage balance $250,000; future education costs $100,000; final expenses $15,000; existing life insurance $100,000; savings & investments available $40,000.
The calculator gives an additional coverage to consider of $950,000 (total need $1,090,000). Other results: total need (DIME) $1,090,000, already covered $140,000, rule of thumb (10× income) $700,000.
What your results mean
Total need is what your family would need in a lump sum. The coverage gap is the additional insurance to consider after existing policies and savings.
Tips
- Match the term length to your longest obligation (often the mortgage or kids’ ages).
- Get quotes from several insurers; health and age drive price.
- Review coverage after marriage, a new child or a new home.
Frequently asked questions
What is the DIME formula for life insurance?
Debts + Income (annual income × years) + Mortgage + Education, minus existing coverage and assets.
Is term or whole life better?
For most families who need income replacement, term is far cheaper per dollar of coverage. Permanent insurance fits specific estate-planning needs.
How much life insurance do I need?
Common rules of thumb are 10–12× income; DIME gives a more tailored estimate.
Does a stay-at-home parent need life insurance?
Yes. Replacing childcare and household work can cost tens of thousands of dollars a year.
Is employer life insurance enough?
Group coverage is often 1–2× salary and usually ends when you leave the job.
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