Life Insurance Needs Calculator (DIME)
How much life cover you need using the DIME method — debts, income replacement, mortgage, education — minus savings and existing cover, with an income-multiple cross-check and a suggested term policy.
| D — Debts and final expenses | — |
|---|---|
| I — Income replacement | — |
| M — Mortgage | — |
| E — Education | — |
| Total need | — |
| Less savings and existing cover | — |
| Gap to insure | — |
| Cross-check: income multiple | — |
| Suggested policy | — |
In short
The DIME method adds Debts, Income × the years to replace it, the Mortgage and Education costs, then subtracts savings and existing cover. A 60,000 earner replacing 10 years of income with a 250,000 mortgage, 15,000 of debts and two children at 50,000 each needs about 914,000 in total — roughly 15× income — before existing cover is deducted.
Who this is for: Families sizing term life cover before getting quotes.
Three ways to size life cover
| Method | How | Best for |
|---|---|---|
| DIME (used here) | Debts + income × years + mortgage + education, minus assets and existing cover | Families — itemised and explainable |
| Income multiple | 10–12× annual income (young children), 5–7× (no dependants) | Quick sanity check |
| Human life value | Present value of all future earnings to retirement | High earners, early career |
- Term vs whole of life: term cover for a fixed period is far cheaper and matches needs that end (mortgage, children). Whole-of-life suits estate or inheritance-tax planning.
- Decreasing term tracks a repayment mortgage balance and costs less than level term for the same starting sum.
- Employer cover (often 2–4× salary) ends when you leave the job — count it, but do not rely on it alone.
- Review after each life event: marriage, a child, a house move, a pay rise, or paying off the mortgage.
See also: UK Inheritance Tax Calculator.
Assumptions
- DIME: debts + final expenses, income × years (discounted at the chosen real return as an annuity), mortgage, children × education cost; minus savings and existing cover.
- Income multiple cross-check = total need ÷ income.
- Suggested policy rounds the gap up to the next 50,000 and matches the term to the income-replacement years.
Worked example
D 25,000 + I 539,000 (60,000 × 10 years discounted at 2%) + M 250,000 + E 100,000 = total need 913,900, about 15× income. Less 140,000 in savings and existing cover → gap of about 774,000; a level term policy of 800,000 for 15 years, or 550,000 level plus a 250,000 decreasing-term mortgage policy.
Frequently asked questions
How much life insurance do I need?
Enough to clear debts and the mortgage, replace your income until dependants are independent, and fund education — minus what you already have. For most families that is 10–15× income.
Does a non-earning partner need cover?
Yes — childcare and household work have a replacement cost; a policy of 150,000–300,000 (or the cost of childcare for the relevant years) is a common starting point.
Should I include the mortgage if I have a payment-protection policy?
Only the part not already covered; enter the covered amount under existing cover.
Is this the same as takaful?
The need calculation is identical; family takaful simply structures the cover on a mutual basis.
Is 10 times my salary enough life insurance?
For a family with young children and a mortgage it is a reasonable floor; the DIME total is usually 12–15× once the mortgage and education are itemised.
How long should the term be?
Until the mortgage is paid and the youngest child is independent — commonly 20–25 years for new parents.
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