Free life insurance needs calculator using the DIME method (Debt, Income, Mortgage, Education). Estimate the right coverage amount in seconds.
Written & fact-checked by the CoverFormula editorial team · Last reviewed 2026-07-15
DIME stands for Debt, Income, Mortgage, Education — a widely used rule-of-thumb formula for estimating how much life insurance coverage a family actually needs, rather than relying on generic multiples of salary (like "10x income"). It adds up every major financial obligation your family would face if your income stopped tomorrow, then subtracts assets already available to cover them.
The tool subtracts any existing life insurance and liquid savings from the total, giving you the net additional coverage to shop for.
Coverage Needed = (Annual Income × Years to Replace) + Other Debt + Mortgage Balance + Education Costs − Existing CoverageIt depends on your income, debts, dependents, and financial goals. The DIME method (Debt + Income replacement + Mortgage + Education) gives a more accurate estimate than flat multiples of salary because it accounts for your actual obligations.
Term life insurance is generally cheaper and matches temporary needs (like a mortgage or raising kids), while whole life is permanent and includes a cash-value component at a higher premium. Most people shopping for pure income replacement choose term.
Yes — include any group life insurance through your employer in the "existing coverage" field, but remember it typically ends if you leave your job, so many people supplement it with an individual policy.