Life Insurance Needs Calculator
The DIME method is a quick way to size life insurance: Debt, Income, Mortgage and Education. Add the four, subtract what you already have, and the remainder is the cover your family would need.
Cover needed
$845,000.00
- DIME total
- $925,000.00
- Multiple of annual income
- 14.0833
Values update as you type. This calculator covers the single scenario its formula assumes — see Common Mistakes for what it leaves out.
The formula this calculator uses
DIME = debts + income x years + mortgage + education; Need = DIME - existing cover - savings
- debts
- Non-mortgage debts such as cards and loans
- income
- Annual income to replace
- mortgage
- Outstanding home loan balance
- education
- Fund for children's education
How to check the result by hand
- 1
List the debts to clear
Add up credit cards, car loans and personal loans. These are the balances you would want gone so the family is not servicing them without your income.
- 2
Set the income replacement
Multiply the annual income the household relies on by the number of years it would need to be replaced. Ten to fifteen years is the common range while children are at home.
- 3
Add the mortgage and education
Use the current mortgage balance and a realistic education fund for each child, remembering that schooling costs tend to rise faster than general inflation.
- 4
Subtract existing cover and savings
Take off workplace death-in-service cover, older policies and the cash the family could spend. This is the protection you already own.
- 5
Express it as a multiple of income
Divide the cover needed by annual income to see the multiple. Most families with a mortgage and young children land between ten and fifteen times income.
For worked examples, common mistakes and the limits of this formula, read the full How To Calculate Life Insurance Needs page.