Life Insurance Needs Calculator
Estimate how much life insurance coverage your family would need, using the DIME method.
This calculator gives a quick estimate based on the DIME rule of thumb (Debt, Income, Mortgage, Education). It is not financial advice - speak to a licensed adviser for a full needs analysis.
DIME Details
How the DIME Method Works
DIME adds up four categories your family would need covered if your income stopped: outstanding Debts, Income replacement for a set number of years, the remaining Mortgage balance, and future Education costs for your children. Existing life insurance and savings are then subtracted, since your family could use those resources first.
Quick Tips
- A common rule of thumb is 10x your annual income
- Term life insurance is usually cheapest for DIME-style coverage
- Review your coverage after major life events (marriage, kids, a new mortgage)
- Employer life insurance often isn't portable if you change jobs
Frequently Asked Questions
DIME is a widely used rule of thumb for estimating life insurance needs: Debt (non-mortgage debts like credit cards, car loans and student loans), Income (years of income your family would need replaced), Mortgage (remaining balance on your home loan), and Education (future education costs for your children). Adding these together, then subtracting existing coverage and savings, gives a reasonable coverage target.
A common starting point is 10 years, which gives a family time to adjust financially after a loss. Some people use fewer years if children are close to becoming financially independent, or more years if a spouse would not re-enter the workforce for a long time.
Term life insurance covers you for a fixed period (e.g. 20 years) and is much cheaper, making it well suited to covering a mortgage or income-replacement need until children are independent. Whole life insurance lasts your entire life and builds cash value, but costs significantly more per dollar of coverage. Most people calculating a DIME-based need are looking for term coverage.
Yes - any savings, investments or existing life insurance your family could draw on reduce the amount of new coverage you need. This calculator subtracts both from your total DIME need to give a more realistic coverage target.
No. This tool gives a quick estimate based on the DIME rule of thumb. Your actual needs depend on your full financial picture, health, dependants and goals - a licensed financial adviser or insurance agent can help you find the right policy and coverage amount.