How Much Term Life Insurance Do You Need?

Why a flat multiple of salary misses the point

A generic "buy 10 times your salary" rule of thumb is easy to repeat, but it ignores everything that actually determines how much a family would need if the primary earner died: how much debt is outstanding, how many years of income actually need replacing, how much mortgage remains, and how many children still need to be put through school.

Two families with identical salaries can have very different real needs depending on those four factors.

The DIME method, Debt, Income replacement, Mortgage, and Education, builds the number from those actual inputs instead. You add up outstanding debt and final expenses, the number of years of income you want replaced, your remaining mortgage balance, and a reasonable estimate of future education costs, then subtract whatever liquid savings and existing coverage you already have.

What is left is a coverage target built from your own numbers, not a generic multiple.

Age is the biggest lever on what that coverage actually costs

Once you know how much coverage you need, age is the single largest factor in what it costs to buy. On a $500,000, 20-year term policy at average health, MoneyGeek's rate data shows a 25-year-old paying roughly $34.5/month, compared to roughly $199.5/month for a 55-year-old for the identical coverage amount, about a 5.8x difference.

If you know you will eventually need life insurance, whether for a future mortgage, future children, or simply income replacement for a spouse, locking in a policy earlier costs meaningfully less for the same coverage.

Health status moves the price substantially too, in both directions from the average-health baseline: excellent health can bring the premium down by roughly 48%, while below-average health can raise it by roughly 11%, for the same age and coverage amount.

Sizing the education component realistically

The "E" in DIME, education, is often the hardest component to estimate, since costs vary enormously by school type. Using College Board's own 2025-26 average total cost of attendance projected across 4 years, a public in-state education runs about $123,960 per child, while a private nonprofit education runs about $261,880, nearly double.

Neither number predicts what a specific child will actually attend years from now, but they are reasonable, sourced anchors to size coverage against rather than guessing at a round number.

To run the full DIME calculation with your own debt, income, mortgage, and education assumptions, plus a premium estimate at your own age and health tier, the term life insurance needs calculator puts all of it together.

When to revisit the number

A DIME-based coverage estimate is not a one-time calculation. A new mortgage, a new child, a paid-off debt, or a significant income change can each shift the right number meaningfully.

Revisiting the calculation every few years, or after any of those life events, keeps the coverage amount matched to your actual current situation rather than one calculated years earlier under different circumstances.