HomeLife Insurance 101How much life insurance do you need?

How much life insurance do you need?

The 10 times income rule

A common starting point is 10 times your annual income. If you earn $60,000 a year, that points to about $600,000 in coverage. It is quick and it works as a rough guide, but it does not account for your debts or how many years your family will depend on you. Use it as a floor, then refine.

Calculating Coverage With the DIME Method

DIME is a fuller way to size your coverage. Add up four things:

D

Debt: credit cards, car loans, and other balances your family would inherit.

I

Income: your yearly income times the number of years your family needs support.

M

Mortgage: the balance left on your home so your family can stay in it.

E

Education: what it would cost to help your children through school.

The total is a coverage amount built around your real life, not a generic multiple.

Do not forget a non-working spouse

If one parent runs the household, their work has real value. Replacing childcare and the hours they cover costs money, so include coverage on them too. See life insurance for military families for how to protect both parents.

Match the term to the need

The amount is only half the decision. The length matters too. Pick a term that lasts until your family no longer depends on your income, often until the mortgage is paid and the kids are grown. A level term policy keeps the price flat for that whole period. If you are weighing a VA option, see VGLI vs term life.

Get a personal number

Rules of thumb get you close. To size it to your exact situation, take the 60-second quiz and a licensed life insurance agent will send a recommended coverage range. For the full picture of your choices, start with veteran life insurance, explained.


Frequently Asked Questions

Is 10 times income enough?
It is a solid starting point, but it does not count your mortgage or debts. The DIME method usually gives a more accurate number.
Should I include my mortgage in the amount?
Yes. Covering the mortgage lets your family stay in the home without the monthly payment hanging over them.
Do I need coverage on a spouse who does not work?
Often yes. A stay-at-home parent provides childcare and household work that would cost real money to replace.