Compute how much term life insurance you should carry using the DIME method, adjusted for existing coverage and liquid assets.
Additional coverage needed
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DIME total need
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Existing coverage + assets
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Income replacement portion
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Education portion
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DIME beats a rule of thumb
The old advice to carry ten to twelve times your income is a fine starting point, but it ignores the things that actually vary between households: how much debt you carry, how big your mortgage is, and how many children you need to put through school. The DIME method builds the number from the obligations your family would face if your paycheck disappeared tomorrow. It adds four pieces: Debt that is not the mortgage, Income to replace for a set number of years, the Mortgage balance, and an Education fund per child. This calculator runs DIME and then subtracts what you already have, so the figure on the left is the genuine shortfall, not a gross need you may have partly covered.
Building a coverage number for one family
The defaults describe a fairly typical breadwinner: $20,000 in non-mortgage debt, $120,000 of income to replace for 10 years, a $300,000 mortgage, two children with a $100,000 education fund each, and existing resources of a $500,000 group policy plus $200,000 in liquid assets. Watch how the four DIME pieces stack up and then get offset by what is already in place.
| DIME component | Amount |
|---|---|
| Debt (non-mortgage) | $20,000 |
| Income ($120,000 times 10 years) | $1,200,000 |
| Mortgage balance | $300,000 |
| Education ($100,000 times 2 children) | $200,000 |
| Total DIME need | $1,720,000 |
| Less existing coverage and assets | $700,000 |
| Additional coverage to buy | $1,020,000 |
Income replacement is by far the heaviest line, $1.2 million of the $1.72 million total. That is almost always true, which is why the number of years you choose to replace income matters so much. Cut it from 10 years to 8 and the need drops by $240,000. Stretch it to cover the youngest child reaching independence and it climbs.
Why term is the honest default
A million dollars of coverage sounds expensive until you price it as term insurance. A healthy non-smoker in their thirties can often buy a 20-year, one-million-dollar level term policy for somewhere in the range of $40 to $70 a month. The same death benefit in whole life can cost ten to fifteen times as much, because you are also funding a slow-growing cash value account wrapped inside the policy. For the vast majority of families, the right move is to buy enough term to cover the DIME gap during the years dependents actually need it, then invest the premium difference. Whole life earns its place only in narrow situations such as funding estate-tax liquidity for a large estate or insuring a special-needs dependent for life.
Should I include my spouse's future income?
If a surviving spouse would keep earning, you can lower the income-replacement years rather than replacing your full salary forever. The DIME need is meant to cover the gap your absence creates, not to make the family wealthy. A common refinement is to replace income only until the youngest child finishes school or until the mortgage is paid, whichever your family decides is the real finish line. Set the years input to reflect that horizon instead of a generic decade.
Is employer group life enough on its own?
Rarely. Most group plans cap out at one or two times salary, which the example above shows is a fraction of a real DIME need. Group coverage is also tied to your job, so it usually vanishes the day you leave. Treat it as a useful supplement that the calculator already subtracts under existing coverage, then buy an individual term policy you own and control for the bulk of the gap.