Most families need somewhere between 10 and 15 times their yearly income in life insurance. So if you earn $60,000 a year, a good starting point is roughly $600,000 to $900,000.
But that's just a starting point. Let's find your real number.
The simple life insurance calculator formula
Use this quick method, sometimes called DIME. Add up four things:
- D — Debt. Credit cards, car loans, personal loans.
- I — Income. Your yearly income times the years your family would need it.
- M — Mortgage. The full balance left on your home.
- E — Education. Future college or school costs for your kids.
Add those together. Then subtract any savings or existing coverage. The result is your target amount.
A quick example
Say you have a $200,000 mortgage, $20,000 in debt, and want to replace $50,000 of income for 10 years ($500,000), plus $80,000 for college.
That's $800,000 in needs. Subtract $50,000 in savings, and your target is about $750,000.
Why "10 times income" is only a shortcut
The 10x rule is fast and easy. But it ignores your debts and goals.
Two people earning the same income can need very different amounts. One might rent with no kids. The other might have a mortgage and three children.
Your life insurance needs are dynamic
Your ideal coverage changes over time. That's normal.
- It rises when you buy a home or have a child.
- It falls as you pay off debt and build savings.
Review your coverage every few years, or after any big life change.
Common mistakes when estimating your policy amount
Avoid these easy-to-miss errors.
- Forgetting to include the mortgage.
- Ignoring a stay-at-home parent's value.
- Buying only what an employer provides — it's often too little.
- Guessing instead of running the numbers.
Want a personalized number in minutes? An agent can run the full calculation with you and match it to a policy you can afford — free of charge.