How Much Life Insurance Do You Actually Need? A 10-Minute Worksheet

Published August 14, 2026

"Ten times your income" is a fine starting point, but your family isn't a rule of thumb. The DIME method takes about ten minutes and gives you a number you can actually defend.

The DIME Method

D — Debt

Add up every debt that wouldn't disappear at your death (besides the mortgage — that's next): car loans, credit cards, personal loans, most private student loans. Federal student loans are discharged at death; many private ones are not.

I — Income Replacement

Multiply your annual take-home income by the number of years your family would need support. A common choice: until the youngest child turns 18 or finishes college. Example: $60,000 × 12 years = $720,000. If your spouse earns well, you might reduce this; if you're the sole earner, don't.

M — Mortgage

Your current payoff balance — not the monthly payment. A paid-off home is the single biggest pressure relief a surviving family can have.

E — Education

A realistic per-child amount for the education you want to fund. In-state public university runs roughly $90,000–$110,000 for four years including room and board; adjust to your goals.

Then Subtract What You Already Have

• Existing life insurance (personal policies and workplace group coverage)
• Liquid savings and investments your family could actually use
• Spouse's ability to maintain income

DIME total − existing resources = the coverage gap you should insure.

Two Cautions

• Don't count on workplace coverage alone. Group life is usually 1–2× salary and disappears when the job does. Own your core coverage personally.
• Insure the stay-at-home parent too. Childcare, transportation, and household management have real replacement cost — commonly $30,000–$50,000 a year.