How Much Life Insurance Do I Need?

It's the first question almost everyone asks, and the honest answer is: enough to keep your family's life intact if your income suddenly disappeared. That number is different for every household, but you don't need a financial degree to get close. A simple framework called the DIME method gets most families to a sensible figure in a few minutes.

Start with the DIME method

DIME stands for the four things your coverage should be able to absorb. Add them up, and you have a strong starting estimate.

• Debt — credit cards, car loans, personal loans, and any co-signed balances your family would inherit.
• Income — the years of paychecks your loved ones would need to replace. A common guideline is 10 to 15 times your annual income.
• Mortgage — the remaining balance on your home, so your family can stay in it without the monthly strain.
• Education — future tuition or childcare costs you'd want covered even if you weren't there to provide them.

A quick example

Say you earn $70,000 a year, owe $240,000 on your mortgage, carry $20,000 in other debt, and want to set aside $100,000 for your kids' education. Replacing 10 years of income is $700,000. Add the mortgage, debt, and education, and you're looking at roughly $1.06 million in coverage. That can sound large — until you remember term life is designed to make exactly that kind of protection affordable.

Then subtract what you already have

If you already have coverage through work or an existing policy, subtract it from your total. Just keep in mind that employer coverage usually ends when the job does, and it's often only one or two times your salary — rarely enough on its own. Many families use an individual policy as their foundation and treat workplace coverage as a bonus.

Once you have a target number, the next step is comparing carriers — because the price for the exact same coverage can vary widely from one company to the next. That's the part we handle for you, across 20+ top-rated U.S. carriers, at no cost.

For general guidance only — not a quote or offer of insurance. Features, availability, and pricing vary by carrier, state, and underwriting. Stephen Tomes is a licensed independent insurance agent (NPN 22123265).