Term Life Insurance Calculator

How the DIME method works

The DIME method is a straightforward way to size a life insurance policy around what your family would actually have to pay for if you were gone. The letters stand for Debt, Income, Mortgage and Education. You total your non-mortgage debts, the income your household would need to replace for a chosen number of years, the balance left on your mortgage, and large future obligations such as your children's college costs. This calculator also adds a line for final expenses — funeral and end-of-life costs — which routinely run into five figures.

From that total you subtract the money already standing behind your family: emergency savings, investments and any life cover you hold, including a group policy through work. What remains is the coverage gap — the amount of new term life insurance that would let your dependents clear the debts, stay in the home and keep the same standard of living for the years that matter most.

A worked example

Take a household earning $60,000 a year that wants to replace ten years of income. Income replacement alone is $600,000. Add $15,000 of credit-card and car debt, a $220,000 mortgage, $100,000 set aside for the children's education, and $15,000 for final expenses, and the obligations come to $350,000. Together that is $950,000 of need.

Now subtract $50,000 already held in savings and existing cover, and the recommended coverage lands at roughly $900,000. Change any single input — fewer years of income, a smaller mortgage, more savings — and the headline figure updates immediately, so you can see exactly which part of your finances is driving the number.

Term versus whole life insurance

Term life insurance covers a fixed period, commonly 10, 20 or 30 years, and pays a death benefit only if you die within that window. Because it has no investment component, premiums are low, which is why term is the usual choice for covering temporary but heavy responsibilities — a mortgage and children at home. Whole life, by contrast, lasts your whole life and builds a cash value, but the same death benefit can cost five to ten times as much.

The DIME figure here points to how much term cover would fill your gap. If you want to protect against living risks too, you can pair it with our disability insurance calculator and our critical illness calculator, which size cover for the income you would lose if illness or injury kept you from working rather than if you died.

This calculator is an educational estimate, not financial advice. Your actual needs depend on your full circumstances, and a licensed insurance professional can help you confirm the right amount and policy type.

Frequently asked questions