Estimate how much life insurance your family would need if you died: by the DIME method (debts, income, mortgage and education) and by income replacement, less the cover and savings you already have. Works in any currency.
How to use the life insurance calculator
- Choose your currency and enter your yearly income and how many years your family would need it.
- Enter your debts other than the mortgage, final expenses, the mortgage balance and your children's education costs.
- Enter the life insurance you already have and the savings your family could use.
- Read the cover needed by both methods and what makes up the total. Optionally value the income at a return after inflation.
Formulas
DIME = debts + final expenses + income × years + mortgage + education − existing cover − savingsIncome replacement = income × years − existing cover − savings- With a return after inflation r:
income part = income × (1 − (1 + r)^−years) ÷ r × (1 + r)
Example
Someone earning 60,000 a year wants to replace their income for 10 years, owes 15,000 besides a 200,000 mortgage, expects 10,000 of final expenses and 100,000 of education costs, and has 20,000 of savings. DIME gives 905,000 of cover; income replacement alone gives 580,000.
Planning further ahead? The retirement calculator works out what you need to save, and the budget planner shows how premiums fit into your monthly spending.
An estimate, not insurance or financial advice. Speak to a licensed adviser before buying a policy.
Frequently asked questions
How much life insurance do I need?
Enough for your family to clear what you owe and live without your income for as long as they'd need it. Add up your debts and final costs, the income to replace, what's left on the mortgage and your children's education, then take off any life insurance you already have and savings they could use. With the example figures on this page that's 905,000.
What is the DIME method?
DIME stands for Debt, Income, Mortgage and Education. Debt is everything except the mortgage, plus final expenses (here 25,000); Income is your yearly income times the years your family would need it (60,000 × 10 = 600,000); Mortgage is the balance (200,000); Education is your children's future schooling (100,000). The total, 925,000, less what you already have, is the cover to look for.
What is the income replacement method?
It only replaces your income: yearly income × the number of years to replace it, less existing cover and savings. 60,000 for 10 years is 600,000, or 580,000 after the 20,000 of savings. It's quicker than DIME but leaves out debts, the mortgage and education, so it's usually lower.
Why does a return after inflation lower the amount?
A lump sum your family invests can earn a return while they draw on it. If it grows 2% a year faster than prices, 60,000 a year for 10 years needs about 549,734 today instead of 600,000. Leaving it at 0% is the cautious choice, because returns aren't guaranteed and prices rise.
Should cover through my job count?
Count it, but remember that workplace cover usually ends when you leave the job, so cover you own yourself is steadier. Savings count only if your family could really use them, not money set aside for your own retirement.
Is this a recommendation?
No. It's an estimate to start a conversation. A licensed adviser or insurer will look at your health, other income, government benefits, tax and the type of policy (term or whole life) before recommending a sum assured.
