Term Life Insurance Calculator for Families

How much coverage does each earner need? This calculator uses the DIME method — the same framework fee-only advisors use — to estimate the right coverage amount and term length for each earner in a two-income household.

How the DIME method works

DIME stands for Debt, Income replacement, Mortgage, and Education. Each component answers a simple question: if this earner dies today, what does the surviving household need money for?

• D — Debt: Non-mortgage balances that don't disappear at death (student loans, auto loans, credit cards). The survivor inherits joint debt and may need to pay down individual debt from the estate.
• I — Income replacement: The earner's annual income × the number of years until the youngest child is financially independent (minimum 10 years recommended). This is typically the largest component.
• M — Mortgage: The remaining balance. A death benefit that covers the mortgage lets the surviving parent stay in the house without a major income hit.
• E — Education: Estimated college costs for all kids. Parents who die young often intended to contribute — without life insurance, that plan evaporates.

Subtract any existing coverage (employer group life, individual policies) from the DIME total to find your net coverage gap.

Choosing your term length

Term life should last long enough to cover your peak financial vulnerability. For most families that's:

• 30-year term if your youngest child is under age 2, or if either earner is under 35. You want coverage to still be in force when the child is independent and retirement is near.
• 20-year term if your youngest is ages 2–12. Coverage lasts until the child finishes college with some runway.
• 15-year term if your youngest is a teenager and other financial goals are largely funded.

Laddering is common: one large 30-year policy + a smaller 20-year policy. The shorter policy expires when the mortgage is nearly paid off; the longer one covers the earner into their 60s. A fee-only advisor can model the ladder that fits your specific numbers.

What DIME doesn't capture

DIME is a starting point, not the final word. A comprehensive analysis also considers:

• Survivor income: If the surviving earner makes $200K and the mortgage is manageable on one income, you don't need to fully fund income replacement. The DIME total can be reduced proportionally.
• Social Security survivor benefits: Children under 18 (or under 19 in school) and the surviving spouse may qualify for benefits — typically 75% of the deceased's earned benefit per eligible dependent, subject to a family maximum. This offsets the income-replacement component.
• Non-financial labor: Stay-at-home or part-time earners contribute childcare, household management, and scheduling work that costs $30,000–$80,000/year to replace with paid services. That number belongs in the coverage calculation too.
• Business interests: If either earner owns a business, key-person or buy-sell coverage may be needed separately from personal term life.

See the Family Financial Planning Guide for how insurance fits into the broader household picture — term life interacts with disability insurance, retirement accounts, and estate documents in ways the DIME number alone doesn't show.