DIME = D+I+M+E
The DIME method: calculate your life insurance needs
The DIME method calculates life insurance needs as the sum of four components: D = all non-mortgage debt to be paid off, I = annual income × years until your youngest child is financially independent, M = remaining mortgage balance, E = estimated education costs per child. Total DIME usually exceeds the simpler 10x salary rule by 30-50% for parents.
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Try calculatorKey takeaways
04 · ideas- D = all non-mortgage debt to pay off
- I = income × years until youngest child is independent
- M = mortgage remaining balance
- E = estimated education costs per child
DIME stands for: Debt + Income replacement + Mortgage + Education
Add these four numbers to get your minimum life insurance coverage.
Example for a 35-year-old:- D — Other debts: $40,000 (car, credit cards)
- I — $75,000 income × 20 years: $1,500,000
- M — Mortgage remaining: $280,000
- E — 2 kids × $60,000 education: $120,000
- Total: $1,940,000
The old "10x salary" rule would suggest $750,000 — less than half. The DIME result better reflects actual financial obligations.