Is $500,000 in term life enough?

It depends entirely on your mortgage and income. A family with little debt and one income may need less; a family with a large mortgage and two incomes to replace often needs well over $1 million. The DIME method gives you a figure based on your own situation rather than a generic multiple of salary.

Is my employer group life plan enough on its own?

Rarely. It’s usually capped at 1–2× salary and typically ends the day you leave the job. For most households with a mortgage and children, it covers only a fraction of the real need.

Term life vs. whole life — which should I choose?

For pure income protection, term life buys 5–10× more death benefit per premium dollar. Whole life combines insurance with a savings component at a much higher cost. Most fee-only advisers suggest buying term and investing the difference unless you have a specific permanent need like estate planning.

Are student loans forgiven if I die?

Federal student loans are discharged at death. Most private student loans are not, and can become the estate’s or a cosigner’s responsibility — worth including under "debt" when sizing your cover.

2026-07-16

How much life insurance do I need? (rule of thumb vs DIME)

Q: How long a term should I pick?

Match it to your longest obligation: 30 years for a fresh mortgage or a newborn, 20 years for school-age kids, 10 years if the mortgage is nearly paid off. Shorter terms cost meaningfully less per month.

Most families need term life insurance equal to their outstanding mortgage, other debt, several years of income for the household, and a lump sum per child — minus any coverage and savings they already have. For a typical American family with a mortgage and kids, that lands somewhere between $500,000 and $1,000,000, but the only number that actually matters is your own: it depends on your mortgage balance, your income, and how many years your family would need to manage without it.

This guide walks through exactly how to work that out yourself. If you just want the answer with your own numbers, the life insurance calculator does this same calculation in under a minute, and nothing you type ever leaves your browser.

Why "10 times your salary" is a blunt instrument

The rule of thumb you'll hear most often — buy 10 times your salary — ignores the thing that actually determines your need: your mortgage balance, how many children you have, and what group coverage you already carry through your employer. For some households 10× income is far too much; for a single-earner family with a big mortgage and three kids, it can be dangerously little.

The DIME method: what fee-only planners actually use

DIME is the sizing framework most widely used by financial planners to size term life coverage. The letters stand for the four commitments that outlive you:

Debt — non-mortgage balances: auto loans, student loans (federal student loans are discharged at death, but most private ones are not), credit cards, personal loans. These should be cleared immediately rather than left to your estate.

Income — your annual take-home pay multiplied by the number of years your family would need it replaced. Ten years is a common default for households with young children.

Mortgage — your outstanding principal, so the house is paid off rather than the family having to sell or relocate.

Education — a lump sum per child. $100,000 per child is a reasonable baseline, roughly in line with four years at an in-state public university including room and board — private or out-of-state tuition changes the figure considerably.

Add these four together, subtract what you already have (see below), and you're left with the real gap worth insuring.

What to subtract before you land on a final number

Before you settle on a figure, deduct:

Employer group life insurance — commonly 1–2× salary, but it typically ends the day you leave the job, and for most families with a mortgage it covers only a fraction of the real need.
Any existing individual policies you already hold.
Liquid savings — anything realistically available to your family without a long delay.

Most people are surprised how much bigger the gap is once they actually add this up. A $400,000 mortgage is unremarkable in much of the country, and most employer group life plans fall well short of that alone.

A worked example

Take a family with two children, a $350,000 mortgage, and a combined income of $85,000. They want ten years of income replaced and $100,000 set aside per child:

Item	Amount
Debt (auto, credit cards)	$18,000
Income ($85,000 × 10 years)	$850,000
Mortgage	$350,000
Education ($100,000 × 2 children)	$200,000
Total need	$1,418,000
Employer group life	−$150,000
Savings	−$25,000
Real gap	$1,243,000

That's considerably more than "10 times income" ($850,000) would suggest — the difference comes down to the mortgage and the years of income the family would genuinely need replaced.

Term life vs. whole life — pick the right tool

For pure income protection, term life buys 5–10× more death benefit per premium dollar than whole life. Whole life bundles insurance with a savings component and permanent coverage, at a much higher ongoing cost. Most independent, fee-only advisers suggest buying term to cover the gap calculated above, and investing the difference — unless you have a specific permanent need, such as estate planning for a very large estate.

Choosing your term length

Match the term to your longest obligation: a 30-year term for a fresh 30-year mortgage or a newborn, 20 years for school-age kids, 10 years if the mortgage is nearly paid off and your children are close to independence. Shorter terms are meaningfully cheaper per month, so it's worth not defaulting to the longest option out of caution alone.

How to use the calculator

The calculator runs this exact DIME calculation automatically, with sensible U.S. defaults for mortgage, income and education costs already filled in. Adjust the numbers to your own situation — age, mortgage, income, number of children, what you already have — and you'll get both a recommended coverage amount and an indicative monthly premium. Try the calculator here — it takes under a minute, and nothing is stored or sent anywhere.