The life cover your family needs.
Cover you need
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Total need before existing cover
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Your breakdown
Updates live as you type| DIME component | Amount |
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Putting a number on a hard question
Working out how much life cover your family needs is uncomfortable, so people either guess or buy whatever a salesperson suggests. The DIME method gives you a defensible figure instead. DIME stands for Debts, Income, Mortgage, and Education, the four things a payout has to take care of if you are not there to earn. This calculator adds those up, then subtracts the cover and savings you already hold, leaving the gap you actually need to insure. The result is a starting estimate to take to an adviser, not a final policy amount, but it stops you flying blind.
Reading each letter of DIME
The tool folds debts and the mortgage into one field because in New Zealand the mortgage is usually the largest debt by far, and you want it cleared so the family can stay in the home. Income replacement is your annual income multiplied by the number of years your household would need that income to keep its footing, often until the youngest child is independent. Education and final costs cover schooling, tertiary study, and the immediate expenses of a death, such as the funeral. Existing cover and savings are then deducted, because any group cover through work, current policies, or liquid savings already do part of the job.
A worked DIME for an $80,000 earner
Consider a parent earning $80,000 who wants ten years of income replaced, carries $450,000 of mortgage and other debt, allows $60,000 for children’s education and final costs, and already has $100,000 of cover plus savings. Income replacement is $80,000 times ten, or $800,000. Add the $450,000 of debt and the $60,000 of education and final costs to reach a total need of $1,310,000. Subtract the $100,000 already in place and the cover gap is $1,210,000.
A New Zealand quirk: no death duty
One thing that simplifies the picture here. New Zealand has no estate tax, inheritance tax, or death duty, and no general capital gains tax, so a life insurance payout passes to your beneficiaries in full, without a slice taken by the government. That differs from several other countries where families plan cover partly to pay an estate tax. It means the figure this tool produces is genuinely what reaches your family, which is a cleaner basis for planning than in jurisdictions where the payout is later taxed.
Where DIME can mislead, and who needs it
DIME is a solid first pass, but it has blind spots. It assumes a lump sum sits idle, when in reality a payout is usually invested and earns a return, which can mean you need slightly less. It also ignores ongoing childcare or the lost unpaid work of a stay-at-home parent, which can mean you need more, so do not skip cover on a non-earning partner. And income protection or trauma cover solve different problems from life insurance, so use this alongside, not instead of, those. This calculator is for parents, new homeowners, and anyone whose income or debts others depend on. The classic mistake is insuring only the higher earner and forgetting the second parent, whose loss also carries a real financial cost.
Does cover through my KiwiSaver or employer count?
Group life cover provided through an employer scheme counts toward the existing cover field, but read the fine print. It often ends when you leave the job and may be a flat sum rather than tied to your salary. KiwiSaver itself is a savings balance, not life cover, though your KiwiSaver passes to your estate on death and can be included in the savings you already hold.
Should I insure my mortgage separately?
You can, through mortgage protection, but a single life policy sized with DIME usually does the same job more flexibly, because the payout is not locked to the loan. Folding the mortgage into your total cover, as this tool does, means your family decides whether to repay the loan or keep the cash working, rather than the insurer deciding for them.