Blog/Insurance

How Much Life Insurance Do You Actually Need?

FinWise Editorial TeamJanuary 18, 20267 min read

Table of Contents

The DIME Method
Term vs Permanent
Common Mistakes
Conclusion

Life insurance exists so dependents can replace your income and settle obligations if you die prematurely.


The DIME Method


Add Debt, Income replacement (years × salary), Mortgage payoff, and Education funding. Subtract liquid assets you already have.


Term vs Permanent


Term is usually enough for income replacement—lower cost, fixed period. Permanent adds cash value but higher premiums—evaluate need vs investment goals separately.


Common Mistakes


Underinsuring after a new child, relying only on employer group coverage (often not portable), and buying complex policies you do not understand.


Conclusion


Recalculate coverage after major life events. A licensed agent can quote term rates; compare multiple carriers.

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