How to use it
Enter the income your family would lose, and for how many years. Then enter what you owe and what you want paid for. Take off the savings and cover you already have. The result is the policy size to shop for.
The formula
This is the DIME method: Debt, Income, Mortgage, Education.
Cover needed = debts + (income × years) + mortgage + education + final costs − savings − existing cover
Example: $75,000 income for 10 years, a $250,000 mortgage, $15,000 of other debt, $100,000 for college and $15,000 for a funeral. You have $50,000 saved and $100,000 of cover through work.
- $15,000 + $750,000 + $250,000 + $100,000 + $15,000 = $1,130,000
- $1,130,000 − $50,000 − $100,000 = $980,000
- Policies are usually sold in round sizes, so you would shop for $1,000,000.
Common questions
How many years of income should I cover?
Until your youngest child is grown, or until your partner could manage on their own income. Ten to fifteen years is common. Some advisors use a rule of thumb of 10 to 12 times your income.
Term or whole life insurance?
Term insurance covers a set period, like 20 or 30 years, and costs far less. Whole life lasts your whole life and builds cash value, but costs many times more for the same cover. Most families who need to replace an income buy term.
Does insurance through work count?
Yes, but it usually ends when you leave the job. Many people buy their own term policy as well, so the cover follows them.
Should a stay-at-home parent have life insurance?
Yes. Replacing childcare, cooking, cleaning and driving costs real money. Enter what it would cost to pay for those as the income to replace.
Last checked: 2026-09-26