How much life insurance do I need?

There are three recognized methods, and it helps to know which one a number came from. The DIME method is the most commonly used because it is easy to apply. It adds four components: Debt, meaning what you owe apart from the mortgage; Income, meaning a number of years of income replacement; Mortgage, meaning the remaining balance; and Education, meaning expected costs for children. Its important limitation is that the result is a gross figure. It does not subtract what you already have, so existing savings, investments, and any group life coverage through work have to be deducted to get to the actual gap. A needs-based analysis works from the other direction, totalling the expenses a household would face and then subtracting the resources already available. The human life value method looks instead at replacing future earnings across a working lifetime, which is why it usually produces the largest of the three figures. What the methods cannot settle is the judgment inside them: how many years of income replacement is reasonable, how to treat a surviving spouse’s earnings, and which method suits the household. Our guide on determining life insurance needs walks through all three with a worked example. Treat any figure they produce as a starting range rather than an answer, and review your individual needs with a licensed agent, and where the amount interacts with your broader financial or estate planning, with your financial or tax professional as well.