How much life insurance do I need?
10–12× your annual income if you have dependents, or enough to replace your income until the youngest child is 18 plus pay off all debts. A 35-year-old earning $100,000 with a spouse and young kids typically needs $1,000,000–$1,500,000 in term life coverage.
Formula
DIME: Debt + Income × Years to Youngest Turns 18 + Mortgage Balance + Education Costs
Example
Mortgage: $300k + Income $100k × 16 years (kid is 2) + College $200k = $2.1M. After existing savings ($400k): need $1.7M policy. Cost: ~$80/month for 20-year term.
How it works in detail
The DIME method is more precise than the 10× rule: Debt (mortgage, student loans, etc.) + Income replacement (annual income × years until youngest is 18) + Mortgage payoff + Education funding. Term life insurance (20–30 year term) is almost always the right choice — it's 5–15× cheaper than whole life and you only need coverage while dependents rely on your income. Once your investment portfolio exceeds your coverage need (you're 'self-insured'), you can drop the policy. Most healthy 30-somethings pay $30–60/month for $1M in 20-year term coverage.
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How much do I need to retire?
Multiply your annual spending by 25. If you spend $60,000/year, you need $1,500,000. This is the 4% rule from the Trinity Study (1998) — withdraw 4% annually with a 95%+ historical success rate over 30 years.
How much house can I afford?
You can afford a home priced at roughly 3–4× your gross annual income, assuming 20% down and total housing costs (mortgage + taxes + insurance) staying below 28% of gross monthly income. On $150,000 income, that's a $450,000–$600,000 home with $90,000–$120,000 down.
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