DIME Method

Rules of thumb like “10 times income” give a renter with no children and a homeowner with three the same answer, which is exactly what is wrong with them. DIME replaces the multiple with a tally of the actual obligations a death would leave: outstanding debts, the income the household loses for as many years as it needs support, the mortgage, and future education costs, plus final expenses. Existing policies and liquid savings then subtract.

The income line usually dominates and pushes the answer above the folk multiples, which is why young parents are so often underinsured. The method’s simplifications are honest ones: no discounting or inflation on the income stream (they roughly offset), and no Social Security survivor benefits, which makes the result conservative. The life insurance needs calculator runs the tally line by line.