What this calculator does
DIME is a rough rule-of-thumb method for sizing life insurance coverage by adding up four categories: Debts, Income replacement, Mortgage balance, and Education costs. The idea is to work out roughly what a family would need to stay financially steady if the insured person’s income disappeared.
DIME is a starting point for a conversation, not a finished number. It does not look at existing savings, other life insurance already in place, a partner’s income, or how those needs might change over time. Treat the figure here as a rough estimate to bring to a licensed insurance professional, who can weigh it against the household’s full financial picture.
The formula
Add the four DIME categories together: outstanding debts other than the mortgage, the number of years of income to replace multiplied by annual income, the remaining mortgage balance, and expected future education costs for any children.
| Term | Meaning |
|---|---|
| Debts | Non-mortgage debts that would need to be paid off, such as car loans or credit cards. |
| Income replacement | Annual income multiplied by the number of years that income needs replacing. |
| Mortgage | The remaining balance owed on the family home. |
| Education | Estimated future education costs for any children, such as school or university fees. |
The inputs explained
| Field | What to enter |
|---|---|
| Other debts to pay off (excluding mortgage) ($) | Debts other than the mortgage that would need to be cleared, such as car loans or personal debt. |
| Annual income to replace ($) | The annual income that would need replacing if this person were no longer earning. |
| Years of income to replace | How many years of that income the family would need replaced; ten to twenty years is commonly used as a rough guide. |
| Remaining mortgage balance ($) | The amount still owed on the home mortgage. |
| Future education costs ($) | A rough estimate of future education costs for any children. |
When to use it
Getting a starting figure before speaking to an adviser
DIME gives a defensible ballpark coverage figure to bring to an initial conversation with a licensed insurance professional, rather than starting from a completely arbitrary round number.
Reviewing coverage after a mortgage or income change
A larger mortgage, a pay rise, or a new child changes the DIME components individually, so revisiting the calculation after a major life change is a reasonable check on whether existing coverage still roughly fits.
Comparing DIME against an existing policy
Running the numbers and comparing the result against a current coverage amount is a quick way to see whether a policy taken out years ago has fallen behind a household’s current debts and income.
Worked examples
Every figure in the tables below is produced by this page’s own calculator at build time, so the numbers and the tool always agree. Select any row to load that scenario.
How estimated coverage changes with years of income to replace
A fixed income, mortgage, debt and education figure, across a range of income-replacement periods.
| Years of income to replace | Estimated coverage needed | Income replacement component |
|---|---|---|
| 5 yrs | $655,000.00 | $350,000.00 |
| 10 yrs | $1,005,000.00 | $700,000.00 |
| 15 yrs | $1,355,000.00 | $1,050,000.00 |
| 20 yrs | $1,705,000.00 | $1,400,000.00 |
| 25 yrs | $2,055,000.00 | $1,750,000.00 |
| 30 yrs | $2,405,000.00 | $2,100,000.00 |
How estimated coverage changes with the remaining mortgage balance
A fixed income-replacement figure, debts and education cost, across a range of mortgage balances.
| Remaining mortgage balance | Estimated coverage needed |
|---|---|
| $0 | $755,000.00 |
| $100,000 | $855,000.00 |
| $200,000 | $955,000.00 |
| $300,000 | $1,055,000.00 |
| $400,000 | $1,155,000.00 |
| $500,000 | $1,255,000.00 |
Questions
Is DIME the same as the Human Life Value method?
No. DIME adds up specific obligations and goals, debts, income replacement, mortgage and education, to reach a rough coverage figure. Human Life Value instead works from the present value of a person’s expected future earnings using a discount rate, a more formal actuarial approach; see the Human Life Value calculator for that method.
How many years of income should I use?
There is no fixed rule; ten to twenty years is a commonly used range, often chosen based on how long dependants would need support, such as until children are grown. A licensed insurance professional can help judge a figure that fits a specific household.
Does DIME account for savings or existing life insurance?
No, it only totals the four categories named in the method. Any existing savings, investments or life insurance already in place should be subtracted from the DIME total separately to see what additional coverage, if any, is actually needed.
Should this number be treated as exact?
No. It is a planning estimate built from a simple rule of thumb, not a precise calculation of what a household will actually need. Treat it as a rough starting point and discuss it with a licensed insurance professional before acting on it.
For a different, more formal approach based on the present value of future earnings, see the Human Life Value calculator. To compare quotes of different coverage sizes on equal footing, use the premium per $1,000 calculator.