Life Insurance Calculator: How Much Coverage Do You Need?

The DIME method, and what it misses

DIME is a shorthand for the four buckets most families need to fill when a wage earner dies: Debt, Income, Mortgage, and Education. It is popular because it is easy to explain. It is imperfect because it treats income replacement as a single lump number instead of a stream, and because it ignores the survivor's own earning capacity. This calculator uses DIME as its scaffolding and adds a final expense line, then subtracts what you already carry.

Term versus permanent, at a glance

Term insurance is efficient for large, time-bound needs. If a mortgage is paid off in 20 years and the youngest child is independent by then, a 20-year level term covers the risk at the lowest cost. Permanent insurance is used for needs that do not expire: estate liquidity, a lifetime charitable bequest, funding a buy-sell for a business that outlives any reasonable term. Most households end up owning both.

Where estate planning meets life insurance

For households with meaningful net worth, the death benefit is not just about replacing income for a spouse. It is about delivering non-taxable liquidity that pays estate tax without forcing the sale of a business, real estate, or a concentrated stock position. The most common structure is an irrevocable life insurance trust, or ILIT, that owns the policy so the proceeds sit outside the insured's taxable estate. If that applies to you, size the policy in coordination with the estate tax picture rather than off a DIME worksheet.

Why the offsets matter

Most working households already have some coverage through a group plan at work or an older individual policy. Some have earmarked savings, a paid-off home, or a pension that will continue to a survivor. The number this tool produces is incremental coverage beyond what you already have in place, which is usually the honest way to think about it.

What the calculator cannot tell you

It cannot tell you whether you will qualify for the coverage at a preferred rate class, which depends on underwriting. It cannot tell you which carrier will pay a claim without friction. It cannot tell you how the policy should be owned or who should be named as beneficiary, which is where poor structure quietly creates estate-tax problems that could have been avoided.

Use the number as a target. Then work with a competent agent to translate it into the right combination of term and permanent, structured so the death benefit lands in the right hands with the right tax treatment.