Life Insurance
How much life insurance do I need?
Use the DIME formula: Debt + Income (10x annual) + Mortgage + Education. A 40-year-old earning $80,000 with a $300,000 mortgage, $30,000 in other debt, and two children needs approximately $1.33M. A $1.3M 20-year term policy for a healthy 40-year-old costs approximately $80–$120/month.
Key Points
- DIME formula: Debt + Income (10x) + Mortgage + Education
- Most financial advisors recommend 10–12x annual income as a starting point
- Term life is the most affordable way to get the coverage amount you need
- Consider your spouse's income, existing savings, and Social Security survivor benefits
- Review your coverage when major life events occur: marriage, children, home purchase
- Don't let perfect be the enemy of good — some coverage is always better than none