How Much Life Insurance Do You Need?
The quick number, and why it's only a start
The fast rule is 10× your annual income. Earn $70,000, start around $700,000. Some people use 15× to pad for inflation or a longer support window.
It's a fine first guess. It's also blind to your actual life: your mortgage, your debts, whether you have three kids heading to college or none. So use it to get in the ballpark, then do the real calculation.
The better number: DIME
DIME adds up what you'd actually be leaving behind. Four buckets:
- D, Debt. Everything that doesn't disappear when you do, except the mortgage: credit cards, car loans, personal loans.
- I, Income. Your annual income times the number of years your family would need it. Young kids? You might replace 20+ years. Kids nearly grown? Fewer.
- M, Mortgage. The full payoff balance on your home.
- E, Education. Estimated tuition and costs to get your kids through school.
Add the four. Then subtract what's already handled: savings, investments, and any coverage you already have (including through work). What's left is roughly the gap a policy needs to fill.
A worked example
Say you're 38, earn $80,000, and want to cover 18 years of income for your family:
| Bucket | Amount |
|---|---|
| Debt (cards + car loan) | $25,000 |
| Income ($80k × 18 years) | $1,440,000 |
| Mortgage payoff | $260,000 |
| Education (two kids) | $200,000 |
| Subtotal | $1,925,000 |
| Minus savings + existing work coverage | −$325,000 |
| Coverage gap | ~$1.6 million |
That's a very different (and more honest) number than "$800,000 because that's 10× my income." It might be higher than you expected, or lower. Either way it's yours, not a rule of thumb. Worth knowing as you carry that figure into a sales conversation: an agent's commission rises with the size of the policy, so the incentive points toward a bigger number than your math. That's exactly why having your own DIME figure in hand is the check against it.
Two adjustments worth making
- Don't forget a stay-at-home parent. If one partner isn't earning a paycheck but is providing childcare, replacing that care costs real money. It belongs in the calculation.
- Match the term to the need. When most of this need disappears once the kids are grown and the house is paid, that's a clue about how long you need the coverage. That's a separate decision from how much.
Before you settle on a number
- Run DIME with your real figures.
- Sanity-check it against 10× income; if they're wildly apart, find out why.
- Subtract everything you already have, including work coverage.
- Note how long the need lasts, so the term fits it.
Download the coverage needs worksheet. Plug in your numbers and get a personalized figure in a few minutes.
Get the worksheetFAQ
Is 10 times my income enough coverage?
It's a fine starting benchmark, but it ignores your actual debts, mortgage, and kids' education. Run the DIME number and compare. For many families with young kids, 10× comes in low.
Should I include the mortgage if my spouse could just sell the house?
Usually yes. Including the mortgage means your family gets to choose whether to stay, instead of being forced to sell at a bad time.
Do stay-at-home parents need life insurance?
Often, yes. If one partner provides childcare and household work, replacing that costs real money. Include it in the calculation even though there's no paycheck.
Does my coverage through work count?
Subtract it from your number, but don't lean on it. Employer coverage is usually modest (one to two times salary) and typically doesn't follow you if you leave the job.
Sources
- NAIC: Life Insurance Buyer's Guide content.naic.org (accessed 2026-06-28)
- NAIC: Life Insurance (consumer) content.naic.org (accessed 2026-06-28)
This article is for general educational purposes only and is not insurance, tax, or legal advice. Cove does not sell insurance and is not affiliated with any insurer. Any figures are illustrative and vary by policy, carrier, and state. Confirm specifics with your carrier and a qualified tax or legal professional. Last updated June 2026.