The life insurance amount you really need — most people either guess way too low, or get sold way too high.
Here’s a simple way to actually calculate it, instead of guessing:
A common starting formula: DIME
→ Debt — total outstanding debt (mortgage, loans, credit cards)
→ Income — years of income your family would need replaced (often 10-15x annual income)
→ Mortgage — remaining mortgage balance, if not already counted in debt
→ Education — future costs for kids’ education if applicable
Add those together, subtract existing savings/assets and any current coverage you already have — that’s a realistic target number.
A quick example: $300,000 mortgage + $50,000 other debt + $700,000 income replacement (10x a $70K salary) + $60,000 education = $1,110,000 in coverage needed, before subtracting existing savings/coverage.
Most people are underinsured because they base their coverage on what feels affordable, not on what their family would actually need. The better approach: figure out the real number first, then find the most affordable way to get there — usually term life insurance, since it gives the most coverage for the lowest cost during the years you need it most.
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