Life Insurance Needs Calculator
Size your coverage with the DIME method.
Cards, auto, student, and other balances.
Future college or schooling costs.
Savings and investments that offset the need.
Life insurance already in force.
Recommended coverage
- Debt
- $25,000.00
- Income replacement
- $700,000.00
- Mortgage
- $220,000.00
- Education
- $100,000.00
- Gross need
- $1,045,000.00
- Less liquid assets
- − $50,000.00
- Less existing coverage
- − $100,000.00
Estimate using the DIME+ method. Income replacement = annual income × years.
How the life insurance calculator works
This tool sizes a life insurance policy with the DIME method: Debt, Income, Mortgage, and Education. It adds those four obligations into a gross need, then subtracts the money your family already has so you only buy the gap.
The math is direct. The gross need is debt + (annualIncome × yearsToReplace) + mortgage + education. The income leg is a simple, undiscounted replacement: your annual income multiplied by the number of years you want to cover. The recommended new coverage is then need = max(0, grossNeed − liquidAssets − existingCoverage). The result is floored at zero, so when your assets and current policies already exceed the gross need the tool returns nothing to buy. When you net out assets or existing coverage, the method is labelled DIME+.
Worked example
A household enters these figures: $20,000 in non-mortgage debt, $60,000 annual income to replace for 10 years, a $250,000 mortgage, and $100,000 of future education funding. They have $50,000 in liquid assets and $100,000 of existing coverage.
| Step | Calculation | Amount |
|---|---|---|
| Debt | given | $20,000 |
| Income | 60,000 × 10 | $600,000 |
| Mortgage | given | $250,000 |
| Education | given | $100,000 |
| Gross need | sum of the four legs | $970,000 |
| Less liquid assets | − 50,000 | −$50,000 |
| Less existing coverage | − 100,000 | −$100,000 |
| Recommended coverage | 970,000 − 150,000 | $820,000 |
The gross DIME total is $970,000. After subtracting $150,000 of assets and current coverage, the household should buy roughly $820,000 of new life insurance. Because offsets were applied, the method shows as DIME+.
How to use it
- Enter the mortgage payoff balance separately from other debt, and put cards, auto, and student loans in the debt field.
- Set years to replace to how long your family needs the income: until the youngest child finishes school, or until a partner reaches retirement, are common anchors.
- Use education for the full expected cost of each child’s schooling, not the amount saved so far.
- List only liquid assets you would actually spend down, such as cash, brokerage accounts, and accessible savings. Skip retirement accounts you want left untouched.
- Add employer and private policies under existing coverage so the result is the new amount to buy, not your total.
Limitations
This is an estimate, not professional advice. The income leg is undiscounted, so it does not account for inflation or the interest a lump sum would earn if invested, which can make the figure conservative over long horizons. It also ignores funeral costs, ongoing childcare, future raises, taxes on benefits, and final medical bills unless you fold them into the inputs. It assumes the obligations stay fixed, when in practice a mortgage shrinks and children age out of dependence. Treat the number as a starting point, then confirm a final policy amount with a licensed agent or fee-only planner.
Frequently asked questions
What does DIME stand for?
DIME is a coverage checklist: Debt, Income, Mortgage, and Education. You add up non-mortgage debt, the income you want to replace, the mortgage balance, and future education costs, then subtract money your family already has. It is a fast way to size a policy without an advisor meeting.
Why is the mortgage counted separately from other debt?
The mortgage is usually the single largest obligation and is secured against the home, so DIME breaks it out from cards, auto loans, and student debt to make sure it is not overlooked. Counting the full payoff lets a surviving partner clear the house, which removes the biggest fixed cost from their budget.
Should I subtract my employer's group life insurance?
Yes, enter it as existing coverage. Group life through work counts toward your total, so netting it out shows the gap you still need to fill privately. Remember that employer coverage often ends when you leave the job, so do not lean on it as your only policy.
Can the calculator return zero?
Yes. If your liquid assets and existing coverage together meet or exceed the gross DIME total, the recommended new coverage is floored at zero. That means your current resources already cover the obligations this method counts, though you may still want coverage for goals it does not capture.
Does a bigger income replacement number always mean I need term life?
Not necessarily, but income replacement is usually the largest leg and term life is the cheapest way to fund it. Term covers a fixed number of years for a low premium, which lines up well with the years-to-replace figure you enter here. Permanent policies cost far more and suit estate or lifelong-dependent needs instead.