DIME method
Life insurance: how much is enough
The 10x salary rule gives a quick estimate but typically understates needs. The DIME method (Debt + Income years until kids are independent + Mortgage + Education costs) produces a more accurate coverage figure. Term life is usually the right choice under age 50; reassess coverage at every major life event — marriage, child, home purchase, or income change.
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Try calculatorKey takeaways
04 · ideas- 10x rule: quick estimate, often too low
- DIME method: more precise, accounts for your situation
- Term life is often the right choice under 50
- Reassess every major life event
Two common rules for calculating life insurance coverage:
10x rule: Coverage = annual income × 10- Earn $70,000/year → get $700,000 in coverage
- Simple, fast, often recommended by insurers
- More precise — accounts for your specific situation
- Usually produces a higher (and more accurate) number
Most financial planners recommend the DIME method as a starting point, then adjusting based on your specific circumstances.