Life Insurance Calculator
How much life insurance do you need? Calculate recommended coverage based on your income, debts, family needs, and future expenses using the DIME method.
Life Insurance Calculator
Determine your coverage needs
Your Information
Mortgage, loans, etc.
Term Life Insurance: Most affordable option for temporary needs. Consider 20-30 year term to cover working years.
📚 Learn About Life Insurance
📊 DIME Method Explained
DIME stands for: Debt (pay off all debts), Income (replace years of income), Mortgage (pay off home), Education (fund children's college). Add these together for total coverage needed.
Example: $50k debt + $500k income (10 years) + $200k mortgage + $100k education = $850k coverage.
🔄 Term vs Whole Life Insurance
- Term Life: Coverage for set period (10-30 years), much cheaper, no cash value
- Whole Life: Lifetime coverage, 10-15x more expensive, builds cash value
- Recommendation: Most people should buy term and invest the difference
💰 Income Replacement Rule
A common rule is 10x your annual income. This ensures your family can maintain their lifestyle. Adjust based on: number of dependents, spouse's income, existing savings, and years until retirement.
Example: $80k salary × 10 = $800k coverage. With working spouse, might reduce to 7-8x.
💵 What Affects Your Premium?
- Age: Younger = much cheaper (buy early!)
- Health: Medical exam, BMI, blood pressure
- Smoking: Smokers pay 2-3x more
- Coverage Amount: More coverage = higher premium
- Term Length: Longer terms cost more
- Gender: Women typically pay less (longer lifespan)
✅ When You Need Life Insurance
- You have dependents (spouse, children)
- You have significant debt (mortgage, loans)
- Your spouse would struggle financially without you
- You want to cover final expenses ($10k-20k)
- You're the primary breadwinner
- You have a business with partners
⚠️ Common Mistakes
- Buying whole life when term is better (overpaying)
- Underestimating coverage needs (too little protection)
- Only insuring the breadwinner (stay-at-home parent needs coverage too)
- Waiting too long to buy (premiums increase with age)
- Not reviewing coverage as life changes
- Relying only on employer coverage (often insufficient)
How to Use This Life Insurance Calculator
Enter Income & Debts
Input your annual income, years to replace, and total debts including mortgage, loans, and credit cards.
Add Family Expenses
Enter children's education costs and final expenses (funeral, estate settlement).
Review Coverage Needs
See recommended life insurance coverage based on DIME method and compare term life quotes.
Frequently Asked Questions
How much life insurance do I need?
A common rule is 10x your annual income, but the DIME method is more accurate. Calculate: (1) all debts to pay off, (2) income replacement for 5-10 years, (3) mortgage balance, (4) children's education costs, and (5) final expenses ($10k-20k). For example, someone earning $75k with $250k mortgage, $50k other debts, and $100k education costs would need about $850k-$1M in coverage. Adjust based on spouse's income and existing savings.
Should I buy term or whole life insurance?
For most people, term life insurance is the better choice. It's 10-15x cheaper than whole life and provides pure protection. Buy a 20-30 year term policy and invest the difference in low-cost index funds - you'll likely end up with more wealth. Whole life makes sense only in specific situations: estate planning for high net worth individuals, special needs dependents, or business succession planning. Don't buy whole life as an investment - the returns are typically poor compared to investing.
How much does life insurance cost?
Term life insurance is very affordable. A healthy 30-year-old can get $500k of 20-year term coverage for $20-30/month. A 40-year-old might pay $40-60/month for the same coverage. Costs increase with age, health issues, and smoking (smokers pay 2-3x more). Whole life is much more expensive: $200-400/month for the same $500k coverage. Get quotes from multiple insurers - prices can vary 30-50% for identical coverage. Buy when you're young and healthy for the best rates.
Do I need life insurance if I'm single with no kids?
If you're single with no dependents and no significant debt, you probably don't need life insurance. However, consider it if: (1) you have aging parents who depend on you financially, (2) you have significant debt that would burden your estate, (3) you want to cover final expenses ($10k-20k), or (4) you have a business partner. One advantage of buying young: you lock in low rates. A small $250k policy bought at 25 stays cheap for 20-30 years, even if your health changes.