Question 1

What is the DIME method for calculating life insurance needs?

Accepted Answer

DIME stands for Debt (all outstanding debts excluding mortgage), Income replacement (years of income your dependents need), Mortgage (remaining balance), and Education (projected future costs for children). Adding these up gives a more personalized coverage estimate than a generic salary multiple.

Question 2

What is the difference between term and whole life insurance?

Accepted Answer

Term life covers you for a specific period (10, 20, or 30 years) at a fixed premium — pure insurance, typically the most cost-effective option for families with a specific coverage need. Whole life combines a death benefit with a savings component at significantly higher premiums. For most families, term is usually the financially better choice.

Question 3

Do I need life insurance if I have no dependents?

Accepted Answer

Coverage is less critical without dependents, but may still make sense if a partner or other person would be financially impacted by your death, if you have significant co-signed debts, or if you want to lock in low rates while young and healthy before dependents arrive.

Question 4

How does age affect life insurance premiums?

Accepted Answer

Premiums increase significantly with age and health status. Buying term coverage in your 20s or 30s locks in much lower rates than waiting until your 40s or 50s — even if you don't currently have dependents, locking in a rate early can be worthwhile if you anticipate needing coverage later.

Question 5

Should I count employer-provided life insurance in my coverage calculation?

Accepted Answer

Yes, as a supplemental offset — but don't rely on it exclusively. Employer life insurance typically ends when you leave the job, so it shouldn't be your primary source of coverage if your need is ongoing. Build your calculation around portable coverage you control.

Question 6

How much income replacement does my family need?

Accepted Answer

A common starting point is 10x annual income, but the DIME method is more precise because it accounts for your specific debts, mortgage balance, and education costs rather than a flat multiple. Use this calculator to model your actual obligations.

How much life insurance do you actually need?

You might also want to calculate

Net Worth Calculator

True Cost of Having a Baby