acalculator

How much life insurance do I need?

Enter your income, debts, mortgage and your children’s education costs. The calculator adds them up by the DIME method and takes off the coverage and savings you already have.

Your numbers

What you already have
Life insurance you need
$1,125,000.00

By the DIME method you need about $1,125,000.00 of life insurance: a DIME total of $1,125,000.00 minus $0.00 you already have.

DIME total
$1,125,000.00
Income to replace
$700,000.00
Education
$160,000.00
Already covered
$0.00

Life insurance you need: $1,125,000.00. By the DIME method you need about $1,125,000.00 of life insurance: a DIME total of $1,125,000.00 minus $0.00 you already have.

What makes up the DIME total?

The results are estimates for information only. They are not financial, tax, or legal advice. Check the numbers with your lender or a qualified professional before you decide. Terms of use

How to calculate

Estimates how much life insurance coverage you need by the DIME method (debt, income, mortgage, education), minus the coverage and savings you already have.

Example with the default inputs (Yearly income to replace $70,000.00, Years of income 10, Debts and final expenses $25,000.00, Mortgage balance $240,000.00, Children to put through school 2, Education cost per child $80,000.00, Life insurance you have $0.00, Savings your family could use $0.00): By the DIME method you need about $1,125,000.00 of life insurance: a DIME total of $1,125,000.00 minus $0.00 you already have.

Method: DIME total = debts and final expenses + yearly income × years + mortgage balance + education cost per child × children; coverage needed = DIME total − life insurance you have − savings, and at least $0.

  • The DIME method is a rule of thumb for the coverage your family would need. It does not quote premiums or look at your health.
  • Income is replaced in today’s dollars with no growth, inflation or investment return, and taxes are not included.
  • Arithmetic is exact on the typed decimals; money shows to the cent, halves up.

Machine-readable copies: Markdown, JSON.

Worked examples

Each example is checked against the calculator on every build.

  1. Yearly income to replace $70,000.00, Years of income 8, Debts and final expenses $35,000.00, Mortgage balance $240,000.00, Children to put through school 1, Education cost per child $80,000.00 gives Income to replace $560,000.00, Education $80,000.00, DIME total $915,000.00, Life insurance you need $915,000.00.Source: Mutual of Omaha, "To know if you have adequate life insurance it only takes a DIME", 2023: debt, income, mortgage and education added up (https://www.mutualofomaha.com/about/newsroom/article/to-know-if-you-have-adequate-life-insurance-it-only-takes-a-dime)
  2. Yearly income to replace $70,000.00, Years of income 10, Debts and final expenses $25,000.00, Mortgage balance $240,000.00, Children to put through school 2, Education cost per child $80,000.00, Life insurance you have $150,000.00, Savings your family could use $40,000.00 gives DIME total $1,125,000.00, Already covered $190,000.00, Life insurance you need $935,000.00.Source: Mutual of Omaha, "To know if you have adequate life insurance it only takes a DIME", 2023: debt, income, mortgage and education added up (https://www.mutualofomaha.com/about/newsroom/article/to-know-if-you-have-adequate-life-insurance-it-only-takes-a-dime)
  3. Yearly income to replace $0.00, Years of income 0, Debts and final expenses $12,000.50, Mortgage balance $0.00, Children to put through school 0, Education cost per child $0.00, Life insurance you have $50,000.00 gives DIME total $12,000.50, Life insurance you need $0.00, Covered beyond the DIME total $37,999.50.Source: Mutual of Omaha, "To know if you have adequate life insurance it only takes a DIME", 2023: debt, income, mortgage and education added up (https://www.mutualofomaha.com/about/newsroom/article/to-know-if-you-have-adequate-life-insurance-it-only-takes-a-dime)

How it works

The DIME method adds four needs:

  • Debts and final expenses: every debt except the mortgage, plus funeral and other final costs
  • Income: the yearly income to replace × the number of years
  • Mortgage: the balance still owed on your home
  • Education: the cost per child × the number of children

Then:

  • DIME total = debts + income × years + mortgage + education cost × children
  • Already covered = life insurance you have + savings your family could use
  • Life insurance you need = DIME total − already covered, and $0 if that is below $0
  • Covered beyond the DIME total = already covered − DIME total, shown only when it is more than $0

Rules:

  • Every dollar amount is $0 to $1 trillion. The years of income are a whole number from 0 to 60, and the children a whole number from 0 to 20. An empty "life insurance you have" or "savings" counts as $0.
  • The arithmetic is exact on the decimals you type. Money shows to the cent with halves rounded up (away from 0).

Assumptions

  • The method is a rule of thumb. It does not quote premiums, look at your health, or plan for taxes, inflation or investment returns.
  • Income is replaced at today’s amount for each year.

Worked examples by hand

$70,000 income for 8 years, $35,000 of debts, a $240,000 mortgage, one child at $80,000. Income: 70,000 × 8 = $560,000. Education: 80,000 × 1 = $80,000. DIME total = 35,000 + 560,000 + 240,000 + 80,000 = $915,000. With nothing already covered, the need is $915,000.

The same family with 10 years, $25,000 of debts, two children, a $150,000 policy and $40,000 of savings. DIME total = 25,000 + 700,000 + 240,000 + 160,000 = $1,125,000. Already covered = 150,000 + 40,000 = $190,000. Need = 1,125,000 − 190,000 = $935,000.

Only $12,000.50 of debts and a $50,000 policy. DIME total = $12,000.50. The need is $0, and the policy covers 50,000 − 12,000.50 = $37,999.50 beyond it.

Other questions people ask

What is the DIME method?

DIME stands for debt, income, mortgage and education. You add your debts and final expenses, the income your family would need for a number of years, your mortgage balance, and the cost of your children’s education. The total is the coverage the method suggests.

How many years of income should I count?

A common choice is the number of years until your youngest child is grown, or 10 years. Use more years if your partner would need support for longer. The calculator lets you pick any number from 0 to 60.

Why take off the insurance and savings I already have?

Because they would also be there for your family. A $150,000 policy through work and $40,000 of savings cover $190,000 of the need, so you only need to buy the rest.

Does this calculator quote premiums?

No. It estimates the coverage amount only. What a policy costs depends on your age, health, the term and the insurer, so ask insurers for quotes once you know the amount.

Should I count my income before or after tax?

The calculator uses the income you type. Life insurance death benefits are generally not taxed as income, so some people count after-tax income. Counting before-tax income gives a larger, more cautious number.

Does the DIME method include inflation?

No. It adds today’s amounts with no growth or inflation, which keeps it simple. To allow for rising prices, count a few more years of income or a higher education cost.

What if the result is $0?

Then the life insurance and savings you already have cover the DIME total. The calculator shows how much you have beyond it.