Life Insurance Needs DIME Calculator

The amount that would be needed to pay the mortgage off outright today, not the monthly payment and not the original loan. Enter nothing if you rent or own outright.

Optional. Savings and investments that could actually be used: cash, brokerage accounts and anything else reachable without a penalty. Leave it blank and nothing is taken off. Retirement accounts are usually left out, because drawing them early is expensive and they are needed later anyway.

How many years of that income the household would need replaced. Published guidance does not agree: some sources suggest seven to ten years, others twenty to twenty-five where there are young children, and several tie it to the years until the youngest child leaves school. Twenty matches a twenty-year level term policy and sits in the middle of the published spread.

Everything else owed: credit cards, car loans, personal loans, student loans and any other balance that would still have to be settled. The mortgage is entered separately because the method keeps it separate.

Optional. The share of the income that would have to be replaced. Leave it blank and the whole income is replaced. A household loses one person's spending as well as their earnings, so anything from fifty to a hundred is defensible; whichever you choose, say so when you quote the answer.

Optional. The effective tax the lump sum's investment earnings would attract each year. Leave it blank and the published twenty percent is used. It only ever reduces what the money earns, so raising it raises the lump sum needed.

Optional. The rate the lump sum is assumed to earn while it is being paid out. Leave it blank and the published six percent is used. A higher rate means a smaller lump sum is enough, so this is the single assumption that moves the discounted figure most; set it to zero and the discounted figure rises above the plain sum, because money that earns nothing while the income it replaces keeps rising has to be larger.

How many children the education figure below should be counted for. Enter nothing, or zero, if there are none, and the education leg drops out of the answer entirely.

The age of the person who would be insured. It chooses a band in the premium ladder and a band in the income multiple ladder, and nothing else in the calculation depends on it. Anyone older than the last band is priced at that last band, and the status line says so.

The income the household would lose, before tax, each year. The method multiplies it by the years you want replaced, so it is the figure that drives the largest part of the answer by far. If two people earn and only one is being insured, enter that one person's income.

The whole cost of educating one child, not a yearly figure. Four years of the average total budget at a public four-year in-state institution, room and board included, is about 124,000 at 2025-26 prices; a private institution is roughly twice that. Guidance from insurers commonly suggests 100,000 to 150,000 per child.

Optional. The rate the income being replaced would have grown at. It does two different things, and this is the one place in the calculator where a blank does not simply mean nothing. Left blank, the plain sum is income multiplied by years, which is the method as it is written down, while the discounted figure still grows the income at the published rate of three percent, because that is the assumption behind the published grid it reproduces. Type a figure, even zero, and both use it.

Optional. What a funeral and the immediate costs around it would take. Leave it blank and nothing is added. The figure shown beside the field is the published median for a funeral with viewing and burial; a cremation is roughly a quarter less and adding a burial vault is roughly a fifth more. Most published statements of this method put final expenses in with the debts rather than with the education.

Optional. Life cover already in force, including any policy provided at work. Leave it blank and nothing is taken off. This and the savings below are what turn an obligation into an amount of NEW cover to buy, and leaving them out is the single most common reason a rule-of-thumb figure comes out too high.

The cover already in force plus the savings and investments entered, added together. Both are blank in the state this opens in, so this reads nothing until you fill one of them.

The illustrative annual premium for each 1,000 of cover at the applicant's age band, taken from the editable ladder this workbook carries. It is a starting point rather than a price: two reputable published tables differ by about a fifth at age fifty for the same age, term, face amount and health class.

The values across the top of the grid: the annual income to replace, in steps of ten thousand either side of yours and never below nothing. Read a column to hold the income fixed and vary the years. The middle entry is the figure you entered.

The same estimate divided by twelve. Policies are commonly billed monthly and often cost a little more that way than paying for the year at once, which this does not attempt to model.

The M of the method: the balance needed to clear the mortgage, carried through from what you entered. It is a payoff figure, so it already falls as the loan is repaid and needs no separate discounting.

The cover needed divided by the annual income, so the answer can be compared directly with the multiples everyone quotes. A household with a large mortgage, young children and twenty years of income to replace lands well above ten, which is the point of showing it.

Machinery, and NOT an input. Excel substitutes each value from the row axis into this cell while it fills the grid; the rest of the time it mirrors the years of income to replace. Change that input, never this one: the axis is derived from it, so editing the mirror moves the axis while the table walks and the grid comes out meaningless.

The body of the grid: the new cover needed, recomputed for every combination of the two axes. One hundred and twenty-one cells, each one the whole calculation run again. It is a component of the table rather than a result on its own.

What the most widely quoted rule of thumb would buy: ten times the annual income. It is shown so it can be compared with the arithmetic rather than trusted, and it is worth knowing that the insurer this figure traces back to publishes it for ages 61 to 65, not for everyone.

Machinery, and NOT an input. The same for the column axis: Excel substitutes into it while filling the grid, and the rest of the time it mirrors the annual income to replace.

Machinery. Excel requires the formula being tabulated to sit in the grid's top-left corner, where it means nothing to a reader, so it is formatted away. It holds the new cover needed.

The values down the left of the grid: the years of income to replace, in steps of two either side of yours and never below nothing. Read a row to hold the years fixed and vary the income. The middle entry is the figure you entered.

The same answer with the income leg valued as a lump sum instead of multiplied out. It is the smaller and the more defensible of the two whenever the money is assumed to earn more after tax than the income grows, which is the usual case, and it is the figure to take to a conversation about how much cover to actually buy.

The D of the method: everything owed apart from the mortgage, carried straight through from what you entered. Final expenses are reported on their own line here rather than folded into this one, so the two can be read separately or added together.

How far the plain income leg sits above the discounted one, as a percentage of the discounted figure. At the published assumptions it is about fifteen percent over ten years and seventeen over twenty, and it grows with the number of years. A negative figure means the assumptions you entered make the lump sum larger than the plain sum, which happens when the money earns less after tax than the income grows.

What the same insurer's age-banded rule would buy: thirty times income up to forty, twenty to fifty, fifteen to sixty and ten beyond. Under forty it asks for three times what the ten-times rule asks for, which is why quoting a single multiple without an age tells a household very little.

What the cover needed would cost in a year at that illustrative rate. It is not a quote and no underwriting is behind it; health, smoking, occupation and the medical exam all move a real price, and a rate from an actual quote entered into the ladder replaces this figure entirely.

The headline answer by the method as insurers state it: the whole obligation less what is already in place, floored at nothing. It uses the plain income leg, so it is the DIME figure as the method is usually stated.

The same years of income, valued as the lump sum that would actually be needed to pay them. The money earns interest, the earnings are taxed, the income being replaced rises, and the first year is needed immediately. At the published assumptions twenty years of 60,000 comes to 1,022,981 rather than 1,200,000.

The income leg as the method is stated in words: the income to replace, multiplied by the years, or summed as a growing series where a growth rate is given. It is the largest leg in almost every case and it is the one that makes a plain DIME total too high, because a lump sum does not sit idle while it is being paid out.

Reads OK, or explains why the inputs are not valid, or why the answer deserves a second look before it is acted on.

The E of the method: the cost per child multiplied by the number of children. It is a total rather than a yearly amount, and it is taken at today's prices with no allowance for education costs rising before the money is needed.

What you entered for a funeral and the costs around it, shown on its own line rather than inside the debt leg. It reads nothing when the input is left blank.

The five legs added together: the whole obligation, before anything already in place is taken off. This is the figure most published statements of the method stop at, and on its own it overstates what has to be bought.