Life Insurance Needs Calculator (DIME Method)
Example: Non-mortgage debt (cards, loans): 20000 $ · Your annual income: 75000 $ · Years of income to replace: 15 years · Remaining mortgage balance: 240000 $ · Education fund per child: 100000 $ · Number of children: 2 kids · Life insurance you already have: 50000 $
| Additional coverage needed | $1,535,000 |
| Total DIME need | $1,585,000 |
| Income replacement portion | $1,125,000 |
| Education portion | $200,000 |
Worked example
Consider a parent earning $75,000 who wants 15 years of income replaced, which is $1,125,000. Add $20,000 in debt, a $240,000 mortgage, and $100,000 of education for each of two children, or $200,000. The gross DIME need totals $1,585,000. Subtract $50,000 of coverage already held through work and the family still needs about $1,535,000 in additional insurance. A 20-year level term policy at that face amount is often surprisingly affordable for a healthy adult.
Frequently asked questions
What does DIME stand for?
Debt, Income, Mortgage, and Education. It is a simple checklist that captures the four largest financial obligations a life insurance payout should cover so surviving family members can stay in their home, clear debts, replace lost income, and educate the children.
How many years of income should I replace?
A common rule is to replace income until the youngest child is financially independent, often 10 to 20 years. Choose a number that lets your family maintain their lifestyle and adjust to the loss without financial pressure. More years means more coverage.
Should I subtract existing savings too?
You can. This tool subtracts existing life insurance. If you also have substantial liquid savings earmarked for these needs, you may lower the education or income inputs accordingly. Do not count retirement accounts your spouse will still need for their own retirement.
Term or whole life for this need?
For pure family protection over a defined period, level term insurance almost always delivers the most coverage per dollar. Whole life mixes insurance with a savings component and costs far more per dollar of death benefit. Most families cover a DIME gap with term.