How much coverage does your family actually need? 2025 Edition
A common rule of thumb is 10–12× your annual income. However, a more accurate method (DIME: Debt, Income, Mortgage, Education) adds up your debts, years of income replacement needed, mortgage balance, and children's education costs, then subtracts existing savings and coverage. Our calculator uses this method.
Term life insurance provides coverage for a set period (10, 20, or 30 years) and is significantly cheaper. Whole life insurance is permanent, builds cash value, and costs 5–15× more per month. For most families, term life offers the best value — buy a 20-year term while your children are young and mortgage is active, then reassess.
A healthy 35-year-old can get a $500,000 20-year term policy for approximately $25–$35/month. Rates increase significantly with age, tobacco use, and health conditions. At age 45, the same policy may cost $50–$80/month. Whole life for the same coverage typically runs $300–$600/month.
Group life insurance from your employer typically provides 1–2× your annual salary — far less than the 10–12× recommended. It's also not portable: if you leave the job, you lose the coverage. Enter your employer coverage in the 'Existing Coverage' field to see your remaining gap.
If you have no dependents and no co-signed debts, you may need little or no life insurance. However, buying a small policy young locks in low rates for the future. If you plan to have a family within 5–10 years, getting covered now is usually cheaper than waiting.