Life Insurance Calculator
Calculate how much life insurance coverage you need based on your income, debts, dependants, and financial goals.
Credit cards, car loans, personal loans
Existing policies + liquid savings
RECOMMENDED COVERAGE (DIME METHOD)
Debt
Income
Mortgage
Education
What is Life Insurance Calculator?
Life insurance coverage is the total death benefit your policy should provide to replace your income and cover your family's financial obligations if you pass away. The right amount depends on your annual income, outstanding debts, number of dependants, existing savings, and future expenses like college tuition. This calculator uses the DIME method (Debt, Income, Mortgage, Education) to estimate a recommended coverage amount.
How to use
- 1 Enter your annual income and the number of years your family would need income replacement.
- 2 Enter your total outstanding debts (credit cards, car loans, personal loans).
- 3 Enter your mortgage balance if applicable.
- 4 Enter estimated education costs for your children.
- 5 Enter existing life insurance and savings to deduct from the total.
- 6 The calculator shows your recommended coverage using the DIME method.
Formula
Example calculation
Annual income: $75,000 × 10 years = $750,000. Debt: $20,000. Mortgage: $180,000. Education: $80,000. Existing savings: $50,000. Coverage needed = $750,000 + $20,000 + $180,000 + $80,000 − $50,000 = $980,000.
Frequently asked questions
How much life insurance do I need?
A common rule of thumb is 10–12× your annual income. The DIME method is more precise: add your Debts, Income replacement need, Mortgage balance, and Education costs, then subtract existing assets. Most families with dependants need $500,000–$1,500,000 in coverage.
What is term vs whole life insurance?
Term life covers you for a fixed period (10, 20, or 30 years) and pays out only if you die during that term. It is much cheaper and is recommended for most people. Whole life covers you permanently and builds cash value, but costs 5–15× more for the same death benefit.
Does my employer's life insurance count?
Group life insurance through work typically provides 1–2× your salary, which is rarely enough for a family. It also disappears if you change jobs. Include it in 'existing coverage' but plan to have personal coverage as well.
Do I need life insurance if I have no dependants?
If no one depends on your income, you may only need enough to cover final expenses and any co-signed debts. Single people with no children and no debt may need very little or no life insurance.
When should I review my life insurance coverage?
Review after major life events: marriage, having children, buying a home, a significant raise, or paying off a large debt. Coverage needs change substantially as your financial situation evolves.