Buy too little and your family is exposed; buy too much and you waste premium. Here’s a practical way to size your coverage.
Start with the “DIME” method
Add up four things:
- D, Debt: credit cards, car loans, and other debts (excluding the mortgage, counted next).
- I, Income: your annual income × the number of years your family would need support (often 10).
- M, Mortgage: the remaining balance so your family can stay in the home.
- E, Education: estimated cost of college or other education for your kids.
Add those up, then subtract savings and any existing coverage (like a small policy through work). The result is a solid starting estimate.
A simpler rule of thumb
Many advisors suggest 10–15× your annual income as a quick baseline. It’s rougher than DIME but a fine sanity check, a $75,000 earner lands around $750k–$1.1M.
Don’t forget the non-earner
A stay-at-home parent provides childcare, household management, and more that would be expensive to replace. They need coverage too.
Term length
Match the term to the need: long enough to cover the years until the mortgage is paid and the kids are independent. A 20- or 30-year term is common.
The bottom line
Size the need with DIME, sanity-check with the income multiple, and choose a term that covers your family’s dependent years. Compare life insurance quotes to see what that coverage costs.