Term Life Insurance Needs Calculator
The DIME method is a simple, structured way to size a term life insurance policy: add the Debt you want cleared, the Income you want replaced, the Mortgage balance, and future Education costs, then subtract what your family already has. This calculator runs that sum and returns the coverage gap, the amount of additional term life cover you should consider buying.
DIME formula
Income replacement = annual income * years
Total need = debts + income replacement + mortgage + education
Coverage gap = total need - existing coverage and savings
The coverage gap is floored at zero: if your existing resources exceed the total need, the additional cover required is none.
Reading the result
- Total need is the gross amount the DIME components add up to.
- Coverage gap is the additional term life cover to consider after existing resources.
- Income replacement is simple income times years, with no inflation or growth adjustment.
- Revisit the figure as debts fall, the mortgage is paid down, and savings grow.
Term life needs: frequently asked questions
What is the DIME method?
DIME stands for Debt, Income, Mortgage, and Education. It is a structured way to size a life insurance need by adding the debts you want cleared, the income you want replaced for a set number of years, the mortgage balance, and future education costs, then subtracting existing coverage and savings.
How many years of income should I replace?
A common approach is to replace income until dependents are financially independent, for example until the youngest child finishes education or a surviving spouse reaches retirement. The number of years is a personal choice; enter the figure that fits your family's situation.
Why subtract existing coverage and savings?
Life insurance need is the gap your family would face, not the total cost of their future. Money they already have, through employer coverage, existing policies, and savings, reduces the additional cover you must buy. The calculator subtracts these so you do not over-insure.
Is the DIME method exact?
No. DIME is a planning estimate, not a precise figure. It does not adjust income replacement for inflation or investment growth, and it cannot capture every household circumstance. Use it to get a sensible starting number, then refine with a financial professional.
Sources and method
- The DIME method is a widely-taught needs-analysis framework summing debt, income, mortgage, and education and netting existing resources. All inputs are user-editable; no figure is hardcoded.
- U.S. Department of Labor: Life Insurance plan information.
Reviewed by the CalculatorHub team, edited by James Graham, 19 June 2026. See our methodology.