How do I calculate the death benefit I should choose?
Answered by 2 licensed agents
Answered by Mary Brown on June 19, 2026
Broker Licensed in NJ
A few questions help narrow it down:
Q: What’s the primary purpose of the life insurance?
A: Income replacement for family
Q: What’s your situation?
A: Married, no kids
For income replacement with a spouse, here are the main approaches:
1. DIME Method (most comprehensive)
• Debt: Total outstanding debts
• Income: Annual income × years until retirement
• Mortgage: Remaining balance
• Education: N/A in your case (no kids)
2. Income Multiplier (quick rule of thumb)
• Multiply your annual income by 10–12x
• Example: $80,000/year → $800K–$960K coverage
3. Human Life Value (more precise)
• Estimate your total future earnings discounted to today
• Annual income ÷ discount rate (e.g., 5%)
• Example: $80,000 ÷ 0.05 = $1.6M
For a married couple with no kids, key considerations:
• How long would your spouse need support? Until they reach retirement age is the typical target.
• Would your spouse keep working? If yes, you may need less — just enough to cover the gap.
• Shared debts? Add mortgage balance + any joint loans on top of income replacement.
• Spouse’s own income? Subtract their annual income from yours to find the net replacement need.
A simple formula for your situation:
(Your income − Spouse’s income) × Years to retirement + Shared debts + Mortgage balance
For example: ($80K − $40K) × 20 years + $50K debts + $200K mortgage = $1.05M
The DIME method is a popular financial formula used to determine exactly how much life insurancecoverage you need to protect your family. It ensures your loved ones are financially secure in the event of an untimely death.
The acronym stands for four key financial categories you must add together:
D - Debt
I - Income
M - Mortgage
E - Education
Answered by Nader Mishreky on June 17, 2026
Broker Licensed in MI, FL, OH & TX
Tags: Coverage Financial Planning
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