How Much Life Insurance Do You Need?

A common rule of thumb is 10x your annual income, but a personalized calculation is always better.

The D.I.M.E. Method

Use the D.I.M.E. formula to calculate your needs:

D - Debt

Calculate all your outstanding debts (credit cards, student loans, lines of credit). Note: Do not include your mortgage here if you count it in the next step.

I - Income Replacement

How many years of your salary would your family need if you passed away? Example: $60,000 salary x 10 years = $600,000.

M - Mortgage

What is the remaining balance on your mortgage? Paying this off ensures your family has a home.

E - Education

Estimate the cost of sending your children to college or university. Example: $50,000 per child.

Total Calculation

Total Need = Debt + Income Replacement + Mortgage + Education - Existing Assets (Savings/Insurance)

Example Scenario

• Debt: $15,000
• Income (10 yrs): $800,000
• Mortgage: $450,000
• Education: $100,000
• Existing Savings: -$50,000

Total Coverage Needed: $1,315,000

Choosing the Term Length

• 10 Years: If your youngest child is 15+.
• 20 Years: If you just bought a home or had a baby.
• 30 Years: If you are young and locked in a low rate.