DIME Life Insurance Need Calculator
Example: Total non-mortgage debt (credit cards, auto, student loans): 30000 $ · Annual income to replace: 75000 $ · Years of income replacement needed: 20 · Remaining mortgage balance: 250000 $ · Number of children: 2 · Education fund per child: 80000 $ · Existing life insurance coverage: 100000 $
| Coverage gap — buy this much more | $1,840,000 |
| Total insurance need | $1,940,000 |
| Income replacement need | $1,500,000 |
| Mortgage payoff need | $250,000 |
| Education fund need | $160,000 |
| Debt payoff need | $30,000 |
Worked example
A 40-year-old earning $75,000 with a $250,000 mortgage, $30,000 in debt, two kids needing $80,000 each for college, and 20 years of income replacement calculates to $1,930,000 total. With $100,000 of employer group life coverage, the gap is $1,830,000. A 20-year term policy for that amount costs roughly $90–$120/month for a healthy 40-year-old.
Frequently asked questions
What is the DIME method?
DIME stands for Debt (all non-mortgage balances), Income (annual earnings × replacement years), Mortgage (remaining balance), and Education (college fund per child). Adding all four gives a bottom-up number tied to real obligations, not a rule of thumb.
Should I count Social Security survivor benefits?
Social Security pays a survivor benefit to your spouse and minor children. The Social Security Administration's online estimator shows your estimated survivor amount. You can subtract that from your income component to reduce the coverage needed.
Does the calculation change if both spouses work?
Yes — run separate calculations for each earner. A stay-at-home parent should also be insured: the NAIC estimates replacement childcare and household services at $40,000–$80,000 per year depending on the number of children and location.
How often should I recalculate my life insurance need?
Revisit after any major life change: marriage, divorce, new child, home purchase, significant income change, or child reaching 22. Life insurance need generally declines as assets accumulate and obligations shrink.