Protect
How much life insurance do I need? DIME formula + calculator
Two ways to size your coverage — a quick income multiple and the more precise DIME method — with worked examples for the most common household situations.
For most working adults with dependents, the right answer is 10 to 15 times your annual income — but the more precise number comes from adding up what your family would actually need to replace.
The wrong number cuts both ways. Underbuy and your family is forced to choose between paying the mortgage and feeding the kids. Overbuy and you waste money on premiums that could have gone into your retirement accounts.
This guide gives you a 30-second estimate, then walks the more precise DIME method with three real-world examples — a single earner, a dual-income couple, and a single parent — so you can shop for coverage with the right target in mind.
The 30-second answer: income multiple
Multiply your annual income by 10 to 15.That's your ballpark coverage. A $90,000 earner needs roughly $900,000 to $1.35 million in term life. The 10× end fits if your kids are nearly grown and the mortgage is small; the 15× end fits if you have young children, a fresh mortgage, and little savings.
Why a multiple, not a fixed number? Because the goal is income replacement — the surviving family invests the death benefit and lives off the withdrawals. At a conservative 4% withdrawal rate, a $1 million payout replaces roughly $40,000 of pre-tax income per year, indefinitely.
The more precise answer: the DIME method
DIME breaks the question into four numbers you can actually total.It's the same method most fee-only planners walk clients through.
- D — Debts. All non-mortgage debt: car loans, student loans, credit cards, personal loans.
- I — Income. Annual salary × the number of years your family would need it (commonly 10–20 years, or until your youngest is independent).
- M — Mortgage. Current remaining balance.
- E — Education. Estimated future college costs per child. A common figure is $25,000–$35,000 per year for four years of in-state public.
Add the four, then subtract what you already have: liquid savings, investments earmarked for the family, and any existing life insurance.
Example 1: Single earner, married, two young kids
Sarah is 34, earns $85,000, and is the sole income. Her spouse is home with their two children (ages 3 and 6). They have a $320,000 mortgage with 27 years left, $18,000 on a car loan, and $45,000 in savings.
| DIME component | Amount |
|---|---|
| Debts (non-mortgage) | $18,000 |
| Income (15 yrs × $85,000) | $1,275,000 |
| Mortgage balance | $320,000 |
| Education (2 kids × $120,000) | $240,000 |
| Subtotal | $1,853,000 |
| Less existing savings | −$45,000 |
| Coverage need | ~$1,800,000 |
Recommendation:a 30-year, $1.75M–$2M term policy. The term covers the mortgage payoff and runs past the younger child's college years.
Example 2: Dual-income couple, one kid
Marcus and Priya are both 32, earning $95,000 and $80,000. One child, age 4. Mortgage balance $410,000, no other debt, $75,000 in savings, each has $95,000 (1× salary) in employer life insurance.
Each partner buys coverage as if the other is gone— that's the scenario the policy must cover. Don't average; size each policy independently.
| DIME component | Marcus dies | Priya dies |
|---|---|---|
| Income (12 yrs × salary) | $1,140,000 | $960,000 |
| Mortgage | $410,000 | $410,000 |
| Education (1 kid) | $120,000 | $120,000 |
| Subtotal | $1,670,000 | $1,490,000 |
| Less savings + work coverage | −$170,000 | −$155,000 |
| Individual policy need | ~$1.5M | ~$1.35M |
Recommendation: a $1.5M, 25-year term on Marcus and a $1.35M, 25-year term on Priya. Workplace coverage stays as bonus.
Example 3: Single parent, one kid
Jamie is 38, single, with a 10-year-old. Earns $72,000. Mortgage balance $245,000 (22 years left), $12,000 on a car loan, $30,000 in savings, no workplace life insurance.
| DIME component | Amount |
|---|---|
| Debts | $12,000 |
| Income (10 yrs × $72,000) | $720,000 |
| Mortgage | $245,000 |
| Education (1 kid) | $120,000 |
| Subtotal | $1,097,000 |
| Less savings | −$30,000 |
| Coverage need | ~$1,050,000 |
Recommendation:a 15-year, $1M term policy. The 15-year term carries Jamie past the child's independence; the slightly shorter term keeps the premium low for a tight single-income budget.
The stay-at-home parent question
Stay-at-home parents need coverage too — sometimes a lot of it. If the at-home parent dies, the surviving spouse faces new costs for full-time childcare, housekeeping, after-school programs, and lost work hours. The market replacement value is commonly estimated at $40,000–$60,000 a year.
A typical range:$250,000–$500,000 in term life on the stay-at-home parent, scaled to the number and ages of children. Premiums are low because the at-home parent isn't replacing earned income.
The income-multiple rule vs. DIME, side by side
| Method | When to use | Drawback |
|---|---|---|
| 10×–15× income | Quick estimate; shopping with no time | Ignores debt, mortgage, college, kids' ages |
| DIME | Buying the actual policy | Takes 10 minutes |
Use 10×–15× to confirm DIME's answer is in the right ballpark. If DIME tells you you need 25× your income, double-check the inputs — usually the income-replacement year count is too high.
Next steps
Once you have your number, the shopping is fast. Many insurers approve healthy applicants under a certain coverage amount with no medical exam.
- Run your DIME number with our life insurance calculator.
- Get quotes from a marketplace to see several insurers at once.
- Or quote directly with a term-focused insurer for the fastest path.
- Lock the term to match your longest obligation (typically your youngest child's independence, or mortgage payoff).
Compare term life quotes at Policygenius →
You can also quote directly with a term-focused insurer:
The bottom line
Run the DIME number — don't guess.A 10-minute calculation gives you a target that fits your actual debts, mortgage, kids, and income gap. Lock in a term that matches your longest obligation, while you're young and the premium is cheap.
Related reading
- Term vs. whole life insurance — which product to buy with your DIME number.
- Best term life insurance for young professionals — top insurers and how to apply.
- Life insurance need calculator — DIME on autopilot.
- How to build an emergency fund — the short-term cushion that pairs with life insurance.
Frequently asked questions
- How much life insurance do I really need?
- For most working adults with dependents, the answer is 10 to 15 times your annual income, layered to last until your largest obligations (mortgage, kids reaching adulthood) end. The DIME method — Debts + Income to replace + Mortgage + Education — gives a more precise number tailored to your situation. Stay-at-home parents need coverage too, sized to the cost of replacing their childcare and household labor.
- Is the income-multiple rule (10×–15× salary) good enough?
- It's a fast starting point, but it can be high or low depending on your debt load, mortgage balance, kids' ages, and existing savings. Use 10×–15× to estimate, then run the DIME method to fine-tune. The DIME number is what you actually shop with.
- Do I need life insurance if I'm single with no kids?
- Usually not. Life insurance replaces income for people who depend on you financially. If no one will face hardship from your death, you don't need it — though a small policy can cover debts a co-signer would inherit (private student loans, joint car loans) and final expenses. Don't buy a big policy you don't need just because a salesperson called.
- How much coverage does a stay-at-home parent need?
- More than you'd think. The surviving partner would face significant new costs for childcare, housekeeping, transportation, and lost time at work. A common range is $250,000–$500,000 in term coverage, scaled to the number and ages of children. The market value of a stay-at-home parent's work is often estimated at $40,000–$60,000 a year.
- Should I count my workplace life insurance toward the total?
- Partially. Employer-provided coverage (often 1× salary, free) is real coverage today but disappears the moment you change jobs or get laid off. Treat it as a supplement, not a foundation. Buy your individual term policy as if the workplace coverage didn't exist, then enjoy the extra protection on top.
- How long should the term be?
- Match the term to your longest financial obligation. If your youngest child is 2 and your mortgage has 28 years left, a 30-year term covers both. Common terms are 10, 15, 20, and 30 years; 30-year is usually a small premium increase over 20-year and locks in your young, healthy rate. Don't buy a 10-year term if a 30-year still costs $40 a month.