The honest answer isn't a round number, it's a formula. Add your debts, the income your family would need replaced, your mortgage balance, and your kids' education costs, then subtract what you've already got. That's the DIME method, and for a typical family with two kids it lands around $1,115,000. Here's the full walkthrough.
DIME stands for the four obligations your family would face without your income:
Add the four, then subtract your savings and investments and any life insurance you already carry, including the group policy through work. What's left is the gap a new policy needs to fill. That subtraction step is what most rules of thumb skip, and it's why DIME gives you a number you can defend rather than a guess.
Take a household earning $80,000 a year with two kids, $15,000 in non-mortgage debt, a $250,000 mortgage, $50,000 saved, and a $100,000 employer policy. The math runs like this:
That number surprises people. It's nearly fourteen times income, and it's still not extravagant: it simply funds the house, the kids, and a decade of groceries and daycare at the same time. The comforting flip side is that term coverage at that size is cheaper than most people assume, often under $60 a month for a healthy 35-year-old.
The popular shortcut says buy ten times your salary. For our example family that's $800,000, which is $315,000 short of the DIME answer. The rule has no idea whether you rent or carry a big mortgage, whether you have zero kids or four, or whether you've already saved six figures. It's a decent gut check and far better than the 1× to 2× that employer plans provide, but if you're going to spend five minutes on this decision, spend them on DIME instead.
Enter your income, debts, mortgage, and kids. The calculator shows each component and compares the result against the 10× rule.
Life Insurance Needs Calculator →For the coverage gap DIME identifies, term is almost always the tool. A 20-year, $500,000 term policy costs a healthy 35-year-old man about $27 a month at 2025 average pricing; whole life at the same size typically runs 8 to 10 times more. Term is pure protection for a defined window, which matches how the need actually behaves: enormous while the kids are home and the mortgage is large, shrinking toward zero as both wind down.
Whole life keeps a cash value and never expires, which has genuine uses, estate planning, a lifelong dependent, or maxed-out tax-advantaged space. But buying whole life because "term is throwing money away" usually means buying a fraction of the coverage your family needs at several times the price.
Group coverage is typically one or two times salary, so $80,000 to $160,000 for our example family, against a $1.1 million need. It's a nice subsidy, and you should count it in the subtraction step, but it has a structural flaw: it isn't yours. Leave the job, get laid off, or retire, and the coverage usually ends when you're older and more expensive to insure. Own your core policy personally and treat the work plan as a bonus.
Every year, a little. The mortgage balance falls, the kids get closer to independence, and your savings grow, so the gap between obligations and assets narrows. That's why laddering works so well: pair a long term policy sized to the mortgage with a shorter one sized to the child-raising years, and let each expire as its job finishes. Rerun the numbers after any big change: a new baby, a new house, a big raise, or a spouse leaving work.
For a single person with no mortgage, usually more than enough. For a family with a house and kids, often not: run the DIME numbers and a $250,000 mortgage plus ten years of income replacement blows past $500,000 quickly. The right answer comes from your obligations, not a round number that sounds large.
Sharply. Sample 2025 averages for a $500,000 20-year term policy run about $27 a month for a healthy 35-year-old man and $148 by 55, roughly doubling every ten years. Health changes can push it higher or make coverage hard to get at all. Locking in a long term while young and healthy is the cheapest path.
Only if someone would be hurt financially by your death. A spouse who needs your income to cover the mortgage counts. Co-signed debts count, since those can land on the co-signer. If you're single, renting, and nobody depends on you, you can usually skip it, though a small policy locks in insurability while you're healthy.
Yes, and stacking is a legitimate strategy called laddering. A common setup: a 30-year policy sized to the mortgage plus a 20-year policy sized to the child-raising years. As each obligation ends, its policy expires and your premium drops with it. Insurers will ask about total coverage to keep the amount reasonable against your income.