Tools Life Insurance Calculator
How much life insurance do I need?
Work out how much life insurance your family would need with the DIME method, the gap after the savings and cover you already have, and the term length that fits.
Your result
What to focus on next
Beyond life insurance
Life insurance protects against the worst case. A strong safety net covers the everyday ones too.
The Security assessment looks at your whole safety net: emergency savings, insurance, debt and the documents your family would need. It takes about two minutes, scores you from 0 to 100 and gives you prioritized next steps. Security is one of eight dimensions in your Wealth Score, alongside your finances, retirement, health, relationships and free time. No sign-up needed.
- Financial
- Retirement
- Security
- Medical
- Physical
- Mental
- Social
- Time
Want the bigger picture first? Read what security wealth means, or the estate planning documents everyone needs.
How this calculator works
Coverage gap = Debts + Income × years + Mortgage + Education − (existing life insurance + savings you would use)
This is the DIME method from our guide, How Much Life Insurance Do You Need?. It follows the same questions state regulators ask you to think through: who depends on you, how much of the household income you provide, and how your family would pay final expenses and debts. The Texas Department of Insurance puts it simply: add up your mortgage and other debts, the income that would need replacing, a funeral and college for the kids.
- Debt: everything you owe apart from the mortgage, plus final expenses. The Insurance Information Institute suggests planning at least $15,000 for the funeral and the cost of settling an estate.
- Income: your yearly income times the years your family would need it, often until your youngest child is grown.
- Mortgage: the balance left, so your family can stay in the home.
- Education: what you would want set aside for each child.
The suggested term is the longest of the years of income, the years until your youngest turns 18 and the years left on the mortgage, rounded up to a common term length (10, 15, 20, 25 or 30 years). Term life covers a set period and is usually the least expensive kind of life insurance, which suits a need that shrinks as children grow and the mortgage is paid down.
The estimate is in today’s dollars and leaves out investment growth, inflation and Social Security survivors benefits, which can help a surviving spouse and children under 18. It is a starting point to take to a licensed agent or fee-only adviser, not a quote. Name your beneficiaries carefully too: a policy pays the named beneficiary, not whoever your will names (see Wills and Estate Planning Basics).
Words you’ll see
- DIME method
- A way to size life insurance by adding Debt, Income, Mortgage and Education, then subtracting what is already in place.
- Coverage gap
- The part of your family’s need that your savings and existing policies would not cover. This is the amount to insure.
- Term life insurance
- Cover for a set period, such as 20 years, that pays only if you die during that time. Premiums on a level term policy stay the same for the whole term.
- Permanent life insurance
- Cover for your whole life as long as premiums are paid, such as whole life. It costs much more than term for the same death benefit.
- Beneficiary
- The person or trust the policy pays. A contingent beneficiary is paid if the first one has died.
Common questions
How much life insurance do I need?
A common way to work it out is the DIME method: add your debts and about $15,000 for final expenses, the income your family would need for a set number of years, your mortgage balance and future education costs. Then subtract the savings you would use and the life insurance you already have. What is left is the coverage gap to insure.
Is 10 times my salary enough life insurance?
It is a reasonable first estimate for many people with dependents, but it can be too little for a family with a large mortgage and young children, or too much for someone with few debts and solid savings. The Insurance Information Institute warns that a salary multiple alone ignores inflation, Social Security survivors benefits, workplace cover and your actual debts. The DIME method gives a more personal number.
How long should a term life insurance policy last?
Long enough to cover the years your family would depend on your income: usually until your youngest child is grown or your mortgage is paid off, whichever is later. This calculator takes the longest of those and rounds up to a common term length of 10, 15, 20, 25 or 30 years.
Should I count life insurance through work?
You can count it, but it usually ends when you leave the job and is often a modest amount, such as one or two times salary. Many people count it in the total and buy an individual term policy for the rest, so their family is not left short after a layoff or job change.
Sources
- Life Insurance Buyer’s Guide, National Association of Insurance Commissioners
- How much life insurance do I need?, Insurance Information Institute
- Do you need life insurance?, Texas Department of Insurance
This tool is for informational and educational purposes only. It is not financial, tax, or legal advice. Consult a qualified professional for guidance specific to your situation.