"How much life insurance do I need?" is the single most googled life-insurance question in America. The answers online range from "10× your salary" to "however much the calculator says" to "as much as you can afford" — none of which actually answer the question.
Here's how to think about it properly.
The 10× rule (and why it's a starting point, not an answer)
The conventional wisdom is to buy a death benefit equal to 10× your annual income. For a $90K earner, that's $900K of coverage. The logic: invested at 5%, the death benefit replaces income for the surviving family.
It's not crazy. But it ignores three big factors: existing assets, existing debts, and the actual lifespan of the need (a 35-year-old with an 8-year-old needs different coverage than a 55-year-old with adult kids).
The DIME method (better, more specific)
DIME stands for Debt, Income, Mortgage, Education. Add up:
- D — All non-mortgage debts (credit cards, car loans, student loans)
- I — Income replacement: annual income × number of years the family needs replacement
- M — Outstanding mortgage balance
- E — Future education costs (typically $100–200K per child for a public 4-year)
Subtract any existing life insurance and significant liquid assets. The remainder is your need.
Why both methods are still incomplete
Both miss what's actually happening: the surviving spouse needs to maintain a lifestyle, not just pay bills. They need to grieve without selling the house. The kids need to stay in their school district. Someone has to take time off work.
And both methods produce a single number, when reality is a curve. The need at age 35 with two young kids is different from the need at 50 when the mortgage is half-paid and one kid is in college.
Our framework
We start with three simple questions:
- If I died tomorrow, how long would my family need full income replacement? Usually until the youngest child finishes college or the surviving spouse can return to full earning. Common range: 15–25 years.
- What major lump-sum needs would arise? Mortgage payoff, education funding, funeral costs, possibly college for kids. Add these up.
- What do I already have? Existing life insurance through work, retirement assets, savings, the surviving spouse's earning power.
The death benefit fills the gap between what's needed and what's there.
Practical example
A 38-year-old earning $110K with a stay-at-home spouse and two kids (ages 6 and 4):
- Income replacement: $110K × 15 years = $1.65M
- Mortgage payoff: $280K
- Education: $200K (two kids)
- Final expenses + emergency cushion: $50K
- Subtotal: $2.18M
- Existing employer policy: $220K
- Liquid savings: $80K
- Need: roughly $1.9M
For a healthy 38-year-old, $2M of 20-year level term costs about $80–120/month. That's the right answer — not "10× your salary" or "what the calculator says."
What about staircase or laddered coverage?
For families with declining future needs (mortgage paying down, kids approaching independence), it can make sense to "ladder" multiple smaller policies with different term lengths — a 30-year for the long tail, a 20-year for the mid-stretch, a 10-year for early-need lump sums. This costs less than a single equivalent policy, but it requires more thought to set up correctly.
Don't forget the spouse
Stay-at-home parents need life insurance too — usually $500K–$1M to cover replacement childcare and household-management labor. The financial loss is real, even if there's no W-2 income.
How we help
Our needs analysis is free. We walk through the questions above, look at existing coverage, and produce a specific dollar number with reasoning attached. Then we shop term coverage across our carriers and present 3 options at different price points. You choose. There's never any pressure — we're a brokerage, paid by the carrier you ultimately pick at the same rate any agent would earn.