How Much Life Insurance Do I Need? (DIME Method + Example)

The short answerEnough to pay off what you owe, replace your income for the years your family would need it, and cover big future costs like college, minus what you already have. A quick way to add that up is the DIME method. Many families land somewhere around 10 to 15 times their yearly income, but your number could be higher or lower.

Why "10 times your income" is only a starting point

Rules of thumb are easy, but they miss the things that actually drive your number: how much is left on your mortgage, how old your kids are, whether your spouse works, and what coverage you already have. Two neighbors who earn the same can need very different amounts.

The DIME method, in plain English

D: Debt. Car loans, credit cards, personal loans, plus final expenses.
I: Income. Your yearly income times the number of years your family would need it replaced.
M: Mortgage. What's left on your home loan (or years of rent).
E: Education. What you'd want set aside for your kids' schooling.

Add those up, then subtract life insurance you already have (like a policy through work) and savings your family could use.

Example numbers only

A hypothetical family: two parents, two kids, a home in the Inland Empire.

Debt: car loan, credit cards, final expenses	$30,000
Income: $65,000 a year × 10 years	$650,000
Mortgage balance	$420,000
Education: 2 kids × $50,000	$100,000
Minus existing coverage through work	−$65,000
Example coverage need	$1,135,000

Hypothetical example for education only. It is not a quote or a recommendation for your situation.

Does a big number mean a big premium?

Not always. For a healthy younger person, term coverage can cost less than people expect, and you can mix coverage types: term for the years the kids are home and the mortgage is big, and a smaller permanent policy for the long run. You don't need a lot of money to protect your tomorrow, today.

Get your own number in about 3 minutes

Our free Family Needs Analysis walks you through it with your real numbers. No sign-up needed to see your result.

Start the free needs analysis

Related free tools

FAST calculatorSee where money leaks each month and what you could redirect toward protecting your family.See what you may qualify forAnswer a few health questions and see which options are likely to fit.Mortgage coverage calculatorStart with your loan balance and monthly payment.

Common follow-up questions

How often should I recheck my coverage?

After big life changes: marriage, a baby, a new home, a raise or a paid-off loan. Running the free needs analysis again takes a few minutes.

Is 10 times my income enough life insurance?

It can be a reasonable rough guide, but it ignores your mortgage, debts, kids' ages and existing coverage. Two people with the same income can need very different amounts.

Is the life insurance through my job enough?

Often not. Workplace coverage is commonly a multiple of 1 to 2 times salary and usually ends if you leave the job, so many families treat it as a bonus, not the whole plan.

Do stay-at-home parents need life insurance?

Many do. Childcare, cooking, driving and running the house cost real money to replace, even without a paycheck.

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