Free life insurance calculator
Size your coverage with the DIME method — Debt, Income replacement, Mortgage and Education — then subtract the policy and savings you already have to see your life insurance coverage gap, updated live, as you type.
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Hypothetical projection at fixed rate. Actual savings returns vary. Excludes taxes.
Results are estimates. Consult a professional.
What is the life insurance DIME method?
This life insurance calculator sizes your coverage with the DIME method — Debt, Income, Mortgage and Education — the most widely taught rule for working out how big a policy your family actually needs. Instead of a vague multiple of salary, DIME adds up the specific obligations your income covers today, then subtracts the coverage and savings you already have. What is left is the gap: the death benefit you would need to buy so that, if you died tomorrow, your dependents could pay off what you owe and replace the income you brought home.
DIME is an acronym for the four buckets it totals: Debt (credit cards, car loans, personal loans), Income (the years of earnings your household relies on), Mortgage (the balance left on your home) and Education (what it will cost to put your children through school). This calculator adds a fifth, smaller bucket — final expenses — and then nets off your existing life insurance and liquid assets to land on the number that matters.
The Insurance Information Institute frames the same question — adding up debts, income replacement, mortgage and college costs, then subtracting existing resources — in its guide on how much life insurance you need.How the life insurance calculator works
The calculator runs the DIME total in one step and then deducts what you already have. Enter the eight figures and it returns your coverage gap immediately — the amount of new death benefit to shop for.
- Income. Multiply the annual income your family relies on by the number of years they would need it replaced — often until the youngest child is independent, or until a surviving spouse can retire.
- Debt and mortgage. Add the outstanding mortgage balance and every other debt, so survivors are not left servicing them on one income.
- Education. Estimate the total cost of school or college for each child you want the policy to fund.
- Final expenses, then subtract resources. Add funeral and estate costs, then deduct any policy you already hold plus the liquid savings your family could draw on.
The DIME inputs, one by one
| DIME bucket | What to enter | Typical sources |
|---|---|---|
| Debt | Credit cards, car loans, student and personal loans (not the mortgage) | Card and loan statements |
| Income | Annual take-home income your household depends on, multiplied by years to replace | Pay stubs, tax return |
| Mortgage | Remaining principal balance on your home loan | Mortgage statement |
| Education | Total expected cost to school or put each child through college | 529 plan goal, college cost tables |
| Final expenses | Funeral, burial, medical and estate-settlement costs | Funeral cost averages, estate plan |
| Existing coverage | Death benefit of any life policy you already hold, incl. group cover at work | Policy declarations, HR benefits |
| Liquid assets | Savings and investments survivors could spend without selling the home | Bank and brokerage balances |
The mortgage gets its own line in DIME and is not double-counted in the Debt bucket. Source: Insurance Information Institute, how much life insurance do I need.
A worked example: a family with young children
One earner brings home $100,000 a year and the family wants 10 years of income replaced. They owe $250,000 on the mortgage and $20,000 in other debts, expect $100,000 of college costs for two kids, and budget $25,000 for final expenses. They already hold $200,000 of group life cover and have $50,000 in liquid savings.
Step 1 — Total the DIME need
Income replacement is $100,000 × 10 = $1,000,000. Add the mortgage, debts, education and final expenses: $1,000,000 + $250,000 + $20,000 + $100,000 + $25,000 = $1,395,000.
Step 2 — Subtract what they already have
Existing coverage plus liquid assets is $200,000 + $50,000 = $250,000. The coverage gap is $1,395,000 − $250,000 = $1,145,000.
DIME vs. the 'multiple of income' rule of thumb
A common shortcut is to buy 10 to 12 times your annual income. It is fast, but it ignores your actual debts, your mortgage, and the coverage you already hold — so it can leave you over- or under-insured. DIME is slower but personal: it counts your real obligations.
| Approach | How it sizes coverage | When it is useful |
|---|---|---|
| 10–12× income rule | Annual income × a fixed multiple | A 30-second gut check before you run the numbers |
| DIME method | Debt + income years + mortgage + education, minus resources | Sizing a real policy around your obligations |
| Human life value | Present value of future after-tax earnings | Valuing the economic loss of the earner |
In the worked example the rule of thumb (10–12 × $100,000 = $1.0–1.2m of total need) is in the same range as the $1,395,000 DIME total — but only DIME nets off the $250,000 already covered.
Term vs. permanent: which policy to fill the gap
DIME tells you how much coverage to buy; it does not tell you which kind. For most families filling an income-and-mortgage gap, level term life — coverage for a set number of years at a fixed premium — is the cheapest way to carry a large death benefit while the children are young and the loan is being paid down.
Permanent policies (whole and universal life) never expire and build cash value, but cost far more per dollar of death benefit. Many planners match the term length to the years your DIME need lasts: a 20-year term, say, to carry the family until the mortgage is clear and the youngest child finishes college.
Insurance Information Institute — the difference between term and permanent (whole, universal) life insurance.Common mistakes when sizing life insurance
- Relying on group coverage alone. Employer life insurance is often just one or two times salary and usually ends when you leave the job — count it, but rarely rely on it.
- Forgetting the stay-at-home parent. The income line should reflect the cost of replacing all the work a household depends on, including childcare a surviving parent would have to pay for.
- Double-counting the mortgage. Put the home loan in the Mortgage line only, not also in Other debts.
- Ignoring inflation on education. College costs rise faster than general inflation; enter a forward-looking total, not today's sticker price.
- Picking too short a term. If the policy lapses before the mortgage is paid and the children are grown, the gap reopens at exactly the wrong time.
Life insurance definitions
How accurate is this life insurance estimate?
The DIME arithmetic is exact, but it is a simplified model. It sums income replacement straight across the years without discounting for the interest a lump sum would earn or adjusting for future inflation, so it can slightly overstate the present-day need while understating the effect of rising costs. It also cannot know your tax situation, Social Security survivor benefits, or your family's risk tolerance.
Treat the result as a planning estimate to take into a conversation with a licensed agent or fee-only advisor — not financial advice or a quote. The premium you actually pay depends on your age, health and the insurer's underwriting.
Insurance Information Institute — How much life insurance do I need?NAIC — Life insurance consumer information and the Life Insurance Buyer's Guide.Frequently asked questions about the free life insurance calculator
About this Life insurance calculator
This life insurance calculator runs entirely in your browser — the income, debts and assets you enter are never stored or sent anywhere. It applies the DIME method (income replacement + mortgage + debts + education + final expenses, minus existing coverage and liquid assets) and recomputes your coverage gap the instant you change a figure. It is a planning estimate, not financial advice or an insurance quote.
It is one of our free insurance calculators. Compare it with the economic-value view in our human life value calculator, or browse the complete calculators directory.