Term Life Insurance Needs Calculator

How the DIME method works

DIME is a needs-analysis approach to sizing a term life insurance policy, standing for Debt, Income, Mortgage, and Education. Rather than relying on a flat rule of thumb like "buy 10 times your salary," it builds a coverage target out of your actual financial obligations: what you owe, how many years of income your family would need replaced, what is left on your mortgage, and what it would cost to send your children through college.

Financial advisors and insurance educators (Ritter Insurance Marketing, WPInsure, and others) describe the same four components and the same final step: subtract your existing liquid savings and any life insurance you already have, since new coverage only needs to fill the remaining gap.

The "D" covers non-mortgage debt, credit cards, personal loans, auto loans, and student loans that would not be forgiven, plus final expenses. A funeral with viewing and burial carries a median cost of $8,300 according to the National Funeral Directors Association's most recent published study, worth keeping in mind when you set this number even if you do not itemize it separately.

The "I" is your income multiplied by the number of years you want to replace it, a personal planning choice rather than a fixed industry figure; many families use somewhere between 10 and 20 years, roughly until children are grown or a surviving spouse could reasonably rely on other income.

The "M" is simply your remaining mortgage balance. The "E" is the projected cost of college per child: this calculator uses College Board's 2025-26 average total cost of attendance (tuition, fees, room, board, and books) for a 4-year degree, roughly $124,000 for an in-state public school, $204,000 out-of-state public, or $262,000 at a private nonprofit university, each multiplied by 4 years.

Once those four pieces are added up, the calculator subtracts what you already have working in your favor: existing savings and investments, and any life insurance coverage you already carry (through an employer or a prior policy).

What is left is the recommended amount of new term coverage. This approach tends to produce a more accurate, individualized number than income-multiple rules of thumb, though it still will not capture every family's situation, for example ongoing childcare costs or a special-needs dependent, so treat it as a strong starting point rather than a final answer.

The premium estimate shown alongside your coverage amount is built from MoneyGeek's 2026 term life rate data for a 20-year policy, which publishes rates by age, by coverage amount, and by health classification from the same underlying data set.

Cost rises steeply with age (a 60-year-old pays roughly 6 to 10 times what a 30-year-old pays for the same coverage) and moves meaningfully with health class: preferred-plus applicants can pay roughly half of what a standard applicant pays for identical coverage.

Smoking status is not modeled here since it was not part of this calculator's inputs, but it is worth knowing that smoking alone can add over $100/month to a 40-year-old's premium on a $500,000 policy.

None of these figures replace an actual quote, which depends on a full underwriting review, but they should get you into a realistic ballpark before you start shopping.