{
  "id": "life-insurance",
  "version": "8a7fa4a2f46d",
  "status": "published",
  "name": "Life Insurance Calculator",
  "question": "How much life insurance do I need?",
  "summary": "Estimates how much life insurance coverage you need by the DIME method (debt, income, mortgage, education), minus the coverage and savings you already have.",
  "category": "finance",
  "subcategory": "investing",
  "url": "https://www.acalculator.org/finance/life-insurance-calculator",
  "markdown": "https://www.acalculator.org/finance/life-insurance-calculator.md",
  "kind": "function",
  "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 $0.",
  "assumptions": [
    "The DIME method is a rule of thumb for the coverage your family would need. It does not quote premiums or look at your health.",
    "Income is replaced in today’s dollars with no growth, inflation or investment return, and taxes are not included.",
    "Arithmetic is exact on the typed decimals; money shows to the cent, halves up."
  ],
  "inputs": {
    "$schema": "https://json-schema.org/draft/2020-12/schema",
    "type": "object",
    "properties": {
      "income": {
        "title": "Yearly income to replace",
        "description": "The income your family would lose each year, before tax.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000000
      },
      "years": {
        "title": "Years of income",
        "description": "How many years of income the coverage should replace, for example until your youngest child is grown.",
        "type": "integer",
        "minimum": 0,
        "maximum": 60
      },
      "debts": {
        "title": "Debts and final expenses",
        "description": "Debts other than the mortgage (car loans, credit cards, student loans) plus funeral and other final costs.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000000
      },
      "mortgage": {
        "title": "Mortgage balance",
        "description": "What is still owed on your home loans.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000000
      },
      "children": {
        "title": "Children to put through school",
        "description": "How many children the coverage should pay education for.",
        "type": "integer",
        "minimum": 0,
        "maximum": 20
      },
      "education": {
        "title": "Education cost per child",
        "description": "What you expect college or other schooling to cost for each child.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000000
      },
      "existing": {
        "title": "Life insurance you have",
        "description": "Coverage you already have, such as a policy through work.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000000
      },
      "savings": {
        "title": "Savings your family could use",
        "description": "Savings and investments your family could spend, not counting retirement accounts you want to keep.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000000
      }
    }
  },
  "outputs": {
    "need": {
      "label": "Life insurance you need",
      "description": "The DIME total minus the coverage and savings you already have, and never below $0.",
      "format": "money"
    },
    "dime": {
      "label": "DIME total",
      "description": "Debts + income × years + mortgage + education cost × children.",
      "format": "money"
    },
    "incomePart": {
      "label": "Income to replace",
      "description": "Yearly income × years of income.",
      "format": "money"
    },
    "educationPart": {
      "label": "Education",
      "description": "Education cost per child × children.",
      "format": "money"
    },
    "covered": {
      "label": "Already covered",
      "description": "Life insurance you have + savings your family could use.",
      "format": "money"
    },
    "extra": {
      "label": "Covered beyond the DIME total",
      "description": "How much the coverage and savings you have are more than the DIME total. Shown only then.",
      "format": "money"
    }
  },
  "defaultAnswer": {
    "inputs": {
      "income": 70000,
      "years": 10,
      "debts": 25000,
      "mortgage": 240000,
      "children": 2,
      "education": 80000,
      "existing": 0,
      "savings": 0
    },
    "outputs": {
      "need": 1125000,
      "dime": 1125000,
      "incomePart": 700000,
      "educationPart": 160000,
      "covered": 0
    },
    "text": "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."
  },
  "examples": [
    {
      "given": {
        "income": 70000,
        "years": 8,
        "debts": 35000,
        "mortgage": 240000,
        "children": 1,
        "education": 80000
      },
      "expect": {
        "incomePart": 560000,
        "educationPart": 80000,
        "dime": 915000,
        "need": 915000
      },
      "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); hand calculation in content.mdx: 35,000 + 70,000 × 8 + 240,000 + 80,000 = 915,000"
    },
    {
      "given": {
        "income": 70000,
        "years": 10,
        "debts": 25000,
        "mortgage": 240000,
        "children": 2,
        "education": 80000,
        "existing": 150000,
        "savings": 40000
      },
      "expect": {
        "dime": 1125000,
        "covered": 190000,
        "need": 935000
      },
      "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); hand calculation in content.mdx: 25,000 + 700,000 + 240,000 + 160,000 = 1,125,000; − 190,000 = 935,000"
    },
    {
      "given": {
        "income": 0,
        "years": 0,
        "debts": 12000.5,
        "mortgage": 0,
        "children": 0,
        "education": 0,
        "existing": 50000
      },
      "expect": {
        "dime": 12000.5,
        "need": 0,
        "extra": 37999.5
      },
      "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); hand calculation in content.mdx: covered 50,000 − 12,000.50 = 37,999.50 more than needed"
    }
  ],
  "sources": [
    "Mutual of Omaha, \"To know if you have adequate life insurance it only takes a DIME\" (October 11, 2023). https://www.mutualofomaha.com/about/newsroom/article/to-know-if-you-have-adequate-life-insurance-it-only-takes-a-dime",
    "Internal Revenue Service, Life insurance and disability insurance proceeds (death benefits are generally not taxable income). https://www.irs.gov/faqs/interest-dividends-other-types-of-income/life-insurance-disability-insurance-proceeds"
  ],
  "related": [
    "net-worth",
    "budget",
    "retirement"
  ],
  "changelog": []
}