Updated · Built and checked by the PlinzoTools team, formulas tested against published sources
Estimate a term life insurance coverage need using the standard DIME method (Debt, Income, Mortgage, Education).
This tool applies the DIME method -- a standard, widely taught starting-point estimate for term life insurance coverage -- summing your non-mortgage Debt, years of Income replacement needed, remaining Mortgage balance, and future children's Education costs. This is a general planning heuristic, not personalized financial or insurance advice -- a licensed insurance professional who knows your full situation can give more tailored guidance.
Enter your non-mortgage debt, annual income and years of income you'd want replaced, remaining mortgage balance, and estimated future education costs. Your estimated coverage need appears instantly.
The result is a straight sum: non-mortgage debt, plus annual income multiplied by the number of years you want replaced, plus the remaining mortgage balance, plus future education costs. There is no discounting, inflation adjustment or subtraction of assets, so the output is a gross starting estimate. With the tool's default example values (15,000 dollars of debt, 70,000 dollars of income for 10 years, a 250,000 dollar mortgage and 50,000 dollars for education), the total is 15,000 + 700,000 + 250,000 + 50,000 = 1,015,000 dollars. These figures are only illustrations and not a recommendation.
Coverage estimate = debt + (annual income x years of replacement) + mortgage balance + education costs.
This is the main limitation: the DIME total does not net out what you already have. Existing savings, investments, a spouse's income, employer-provided life insurance, Social Security survivor benefits and any policies you already own may reduce the amount of new coverage you need. Final expenses such as funeral costs are not a separate line either, nor are ongoing health-care costs or a cushion for inflation. Consider these against the total before deciding on a policy size.
Term policies are commonly sold in round amounts and for a set number of years, so match the term length to the longest obligation, often the mortgage or the time until children are independent. Compare quotes from several insurers or through an independent agent, be accurate about your health history on applications, and read what the policy excludes. Some people build a ladder of two policies of different lengths to reduce cost as obligations shrink. Because premiums depend on age, health and other underwriting details, use a licensed agent or a fee-only financial planner to fine-tune the number; this calculator is an educational estimate only.
No -- other methods exist (like a simple income-multiple rule), and a licensed insurance agent or financial planner can tailor an estimate to your full situation, including existing savings and coverage you might net against the total.
Often yes. The tool gives a gross figure, so consider subtracting liquid savings, existing life insurance and other assets your family could use, then discuss the remaining gap with an advisor.
There is no single correct answer. Many people base it on the years until their children are financially independent or until a spouse could reasonably adjust their finances.
No. Enter the mortgage balance only in the mortgage field and keep the debt field for other loans and credit cards.
Often they do, because the family would need to pay for childcare and household work. Enter the estimated replacement cost as the income figure.
Reference: Consumer Financial Protection Bureau