The DIME Method explained, a simple formula that gives you a real answer in 60 seconds.
"How much life insurance do I need?" is the single most common question I hear from families, and it's the right place to start. The answer isn't a random number. It's based on your actual financial life: your debts, your income, your family's needs, and how long they'd need support without you.
The good news? There's a proven formula that takes the guesswork out of it. It's called the DIME method, and I've used it with clients since 2012 to find the right number.
DIME stands for four financial categories. Add them up, and you have your coverage target:
All outstanding debts: credit cards, car loans, student loans, personal loans. Everything except your mortgage (that's separate).
Your annual salary multiplied by the number of years your family would need support. Most advisors recommend 10–15 years.
Your remaining mortgage balance. This ensures your family keeps the home without worrying about payments.
College costs for each child. In 2026, average 4-year tuition ranges from $45,000 (public in-state) to $180,000 (private).
Here's how the formula works for three common life stages:
| D - Student loans + car loan | $45,000 |
| I - $65,000 × 10 years | $650,000 |
| M - Mortgage balance | $280,000 |
| E - No children yet | $0 |
| Total Coverage Needed | ~$975,000 |
Estimated cost: ~$25–35/month for a 20-year $1M term policy in good health.
| D - Car loan + credit cards | $28,000 |
| I - $95,000 × 15 years | $1,425,000 |
| M - Mortgage balance | $340,000 |
| E - 2 children × $50,000 | $100,000 |
| Total Coverage Needed | ~$1,893,000 |
Estimated cost: ~$55–75/month for a 20-year $2M term policy in good health.
| D - Minimal debt | $8,000 |
| I - $120,000 × 10 years | $1,200,000 |
| M - Mortgage balance | $120,000 |
| E - Children graduated | $0 |
| Less: Savings & retirement | −$600,000 |
| Net Coverage Needed | ~$728,000 |
Note: At 55, consider permanent coverage for estate planning or a 10–15 year term to bridge to retirement.
The DIME formula is a great starting point, but I always tell my clients to also consider:
We generally recommend 5 to 10 times annual income to cover the income replacement portion. The rest of the number comes from your debts, mortgage and education costs, which the DIME formula adds separately, so you end up with a figure based on your actual obligations rather than a single multiple.
And here's what surprises most people: the cost is almost certainly less than you think. A healthy 30-year-old can get a $1 million, 20-year term policy for roughly the price of a streaming subscription.
We generally recommend 5 to 10 times your annual income for income replacement, plus your outstanding debts, mortgage balance and any education costs, minus existing coverage and savings. The DIME formula (Debt, Income, Mortgage, Education) adds those pieces separately.
DIME stands for Debt, Income replacement, Mortgage payoff, and Education funding. Add all four together to estimate how much life insurance coverage your family needs.
General insurance information on this page reflects standard industry practice. Texas policy forms and rates are filed with the Texas Department of Insurance; model regulations are maintained by the NAIC. Dev Gaymes is a licensed Texas producer, NPN 16654074, verifiable through the NIPR national producer database.