Life Insurance Calculator (DIME Method)
A rule-of-thumb estimate of how much life insurance coverage your household might need, using the DIME method: Debts, Income replacement, Mortgage, and Education, minus coverage and assets you already have. It estimates a coverage amount only — not premiums, and not which product to buy.
Your DIME coverage estimate
Example: $25,000 debts, $60,000 × 15 years, $250,000 mortgage, $100,000 × 2 children, minus $200,000 in coverage and assets → $1,175,000 need.
What DIME adds up — and what it doesn't claim
DIME is a rule-of-thumb needs estimate: it sizes the pile of money that would let your household clear its debts, keep its income going, pay off the home, and fund education if you died. In the worked example, the four letters are $25,000 of debts and final expenses, $900,000 of income replacement ($60,000 a year for 15 years), a $250,000 mortgage payoff, and $200,000 of education costs for two children — a DIME total of $1,375,000. Subtracting the $200,000 already available (existing coverage plus liquid assets) leaves an estimated additional coverage need of $1,175,000. Every figure is computed by the same tested engine as the calculator above.
What DIME does not do matters just as much: it does not estimate what a policy would cost, it does not recommend any product or insurer, and it ignores investment growth on the income-replacement pool, inflation, and taxes. It is a starting point for a conversation with a licensed professional, not a quote.
DIME vs. the 10×-income shortcut
The older heuristic — carry about ten times your income — would suggest $600,000 for the same household. The worked example's DIME total of $1,375,000 is more than double that, because DIME counts the mortgage, education, and a 15-year income horizon explicitly instead of hiding everything behind one multiplier. The two numbers won't always diverge in that direction: a renter with no children and a short income horizon can come in well under 10×. When the two estimates disagree sharply, the DIME breakdown shows exactly which obligation is driving the difference — that is the number worth examining.
Where this fits in a retirement plan
Life insurance needs and retirement savings move in opposite directions: as your savings grow and your obligations shrink, the coverage gap closes. That is why the calculator lets you subtract liquid assets — a household that has already built the nest egg it is projecting in the Retirement Calculator may need far less coverage than the raw DIME total suggests, and many retirees need none at all.
Frequently asked questions
Should I buy term or whole life insurance?
That decision is out of scope for this tool. DIME estimates how much coverage a household might want in place; it says nothing about which product type, term length, or carrier fits your situation, and it does not estimate what any policy would cost. Product choice involves trade-offs in cost, duration, and cash value that depend on your circumstances — talk them through with a licensed insurance professional.
Why do the income-replacement years matter so much?
Income replacement is usually the largest DIME component by far, and it scales linearly with the years you choose: replacing $60,000 for 15 years adds $900,000, while 10 years adds $600,000. Common ways to anchor the number are the years until your youngest child is independent, until the mortgage would be paid off, or until your spouse or partner reaches retirement. There is no single right answer — try a couple of values and see how the estimate moves.
When should I redo this estimate?
After any major life event: marriage or divorce, a new child, buying a home or paying down the mortgage, a significant income change, or a change in employer-provided coverage. DIME is a snapshot of your obligations today, and each of those events changes at least one of the four letters — so an estimate made a few years ago can be far off in either direction.
Does this tell me what a policy will cost?
No. This calculator estimates a coverage amount (a need), not a premium. What you would actually pay depends on age, health, term length, the insurer’s underwriting, and the product type — none of which this tool models. Quotes from licensed agents or insurers are the only way to price a real policy.
Not financial advice: the DIME method is a general educational rule of thumb for sizing a coverage need. It does not estimate premiums, recommend products or insurers, or account for investment growth, inflation, or taxes. Talk to a licensed insurance or financial professional before making any policy decision. Values are processed locally in your browser and never transmitted. See the methodology page.