How Much Life Insurance Do You Really Need?

Buying life insurance can feel overwhelming, especially when trying to decide how much coverage is enough. Too little coverage can leave your family struggling, while too much may stretch your budget unnecessarily. The key is to find the right balance for your personal situation.

The DIME Method: A Simple Way to Calculate Coverage

One popular formula is the DIME method, which considers four major financial needs:

1. Debt: Credit cards, car loans, and personal loans.

2. Income Replacement: Number of years your family will need your income.

3. Mortgage: Remaining balance on your home loan.

4. Education: Future college costs for your children.

Formula: Debt + Income + Mortgage + Education = Life Insurance Coverage Needed

Example Calculation

• Debt: $20,000

• Income Replacement: $60,000/year × 10 years = $600,000

• Mortgage: $200,000

• Education: $100,000

Total Recommended Coverage = $920,000

Average Coverage by Family Type

Family Situation	Typical Coverage Needed
Single Adult	$100,000–$250,000
Married, No Kids	$250,000–$500,000
Married with Young Children	$500,000–$1,000,000+
High-Income Family	$1,000,000–$2,000,000+

Other Factors to Consider

• Current Savings: Reduce coverage if you already have significant assets.

• Employer Coverage: Many jobs provide life insurance, but it’s often not enough.

• Future Inflation: Costs rise over time—plan accordingly.

There’s no one-size-fits-all answer to life insurance coverage. The right amount depends on your debts, income, family size, and future goals.

At Connect to Coverage, we guide you through these calculations and connect you with the best policies for your unique needs. Request your personalized quote today.