Life Insurance Needs Calculator

How This Calculator Works

The DIME method estimates how much life insurance coverage a family needs by adding up four categories: Debt, Income replacement, Mortgage, and Education. Enter your numbers for each category and this calculator adds them up, then subtracts any existing coverage or liquid assets to show the actual coverage gap a new policy would need to fill.

• Debt — non-mortgage debt (credit cards, personal loans, auto loans) that would otherwise fall to survivors to pay off.
• Income — years of income replacement × annual income, so dependents can maintain their standard of living for a stretch while adjusting to the loss.
• Mortgage — the remaining mortgage balance, so the family isn’t forced to sell the home to cover it.
• Education — estimated future education costs for any children.

Every figure here — years of income to replace, cost per child — is a plain, adjustable input with a commonly-cited starting point, not a fact this calculator asserts about your specific situation. Adjust each one to match your own family’s numbers.

The Formula

$$\vE{\text{Total Need}} = \vA{\text{Debt}} + (\vB{\text{Income}} \times \text{Years}) + \vC{\text{Mortgage}} + (\text{Children} \times \vD{\text{Cost Per Child}})$$ $$\text{Coverage Gap} = \vE{\text{Total Need}} - \text{Existing Coverage}$$

Worked Example

A household with $15,000 in non-mortgage debt, $70,000 annual income (10 years to replace), a $200,000 mortgage balance, 2 children ($50,000 each for education), and $50,000 in existing coverage:

1. Income replacement: $70,000 × 10 = $700,000.
2. Education: 2 × $50,000 = $100,000.
3. Total need: $15,000 + $700,000 + $200,000 + $100,000 = $\vE{\$1{,}015{,}000}$.
4. Coverage gap: $\vE{\$1{,}015{,}000} - \$50{,}000 = \$965{,}000$.