Why the rules of thumb exist — and where they fail
“Ten times your income” is popular because it’s fast. For a lot of families it lands in the right neighborhood. But it ignores the things that make your life yours: a big mortgage or a paid-off house, one income or two, kids headed to college or already grown.
According to LIMRA and Life Happens’ 2024 Insurance Barometer Study, around 102 million American adults say they need life insurance or more of it. In my experience the gap isn’t unwillingness — it’s that nobody ever showed them how to find their real number.
The DIME method, step by step
DIME stands for Debt, Income, Mortgage, Education. You add four numbers, subtract what you already have, and the remainder is the coverage gap. Here’s the whole method:
| Letter | What to add up | Example |
|---|---|---|
| D — Debt | Non-mortgage debts: cars, cards, personal loans | $25,000 |
| I — Income | Annual income × years your family would need it (often until the youngest is grown) | $70,000 × 10 = $700,000 |
| M — Mortgage | Remaining mortgage balance | $300,000 |
| E — Education | Future schooling you want covered, per child | $50,000 × 2 = $100,000 |
Then subtract what you already have
The DIME total above comes to $1,125,000. Now subtract savings you’d be comfortable using and coverage that already exists — say $75,000 in savings and a $125,000 group policy through work. The remaining gap is $925,000. That — not a guess — is the number worth talking about.
This is an illustrative example with round numbers, not a recommendation. Your situation will move every line: two incomes change the “I,” a nearly-paid-off house shrinks the “M,” grown kids may zero out the “E.”
The mistakes I see most
Counting on work coverage alone — it’s usually 1–2× salary and rarely follows you between jobs. Insuring only the breadwinner — a stay-at-home parent’s work (childcare, transport, the household running) costs real money to replace. And waiting for a “better time” — coverage is priced on age and health, so the same policy generally costs less today than it will later.
One more, and it’s the biggest: assuming it’s unaffordable. LIMRA’s Barometer research consistently finds more than half of consumers overestimate the cost of term life — many by three times or more. The way to know is not a guess; it’s an illustration.
Illustrative example — your number depends on your age, health, and the coverage you choose. An illustration is an estimate to guide you, not a guaranteed final price.
About the author
Ken Kaneversky is a licensed independent insurance agent (NPN #22128544) in St. George, Utah — a U.S. Army veteran and cancer survivor licensed in 10 states: UT, IN, NV, ID, WY, SD, HI, CA, AK, and TX. He works with A-rated carriers and gives every family the same thing: a personalized illustration, not a sales pitch. Read Ken’s story