How Much Life Insurance Do I Need?
Quick answer
Most people need 10 to 12 times their annual income in life insurance. A more precise figure adds your debts, mortgage, future education costs and final expenses, then subtracts savings and existing coverage. This is often called the DIME method: Debt, Income, Mortgage and Education.
The DIME method
Add Debt (excluding mortgage), Income (years needed × annual income), Mortgage balance and Education costs for each child. Subtract savings and current coverage.
Example
A parent earning $80,000 with a $300,000 mortgage, $20,000 in debt and two children might need roughly $1.2–1.5 million.
Should stay-at-home parents have coverage?
Yes. Replacing childcare and household work can cost tens of thousands of dollars per year.
Frequently asked questions
Is 10 times income enough?
It is a good starting point, but large debts, young children or a single income often call for more.
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