How Much Term Life Insurance Do I Need?

By the SimpleTermQuote team · Updated August 24, 2026

Start with the 10–12x income rule

The quickest sanity check for coverage is 10 to 12 times your gross annual income. If you earn $70,000, that suggests $700,000 to $840,000 of coverage. The logic: invested conservatively, a payout that size can replace your income for a decade or more while your family adjusts, pays off debts, and keeps long-term goals like college on track.

Rules of thumb are starting points, not answers. Your real number depends on what your income actually supports — which the DIME method captures better.

The DIME method: a more precise calculation

DIME walks through the four things a death benefit typically needs to cover:

• Debt — everything except the mortgage: cars, cards, student loans co-signed by your spouse
• Income — annual income × the number of years your family would need it (often until the kids are independent)
• Mortgage — the full remaining balance, so the house is never at risk
• Education — a realistic per-child amount for college or trade school (many families use $50,000–$100,000 per child)

Add those four numbers, subtract existing coverage and liquid savings, and you have a defensible coverage target.

Common mistakes to avoid

The two most common errors run in opposite directions. Underinsuring — buying a round number like $100,000 because it sounds large — leaves a family that loses a $70,000 earner covered for barely 18 months of expenses. Overinsuring past what underwriting will justify wastes premium; carriers generally cap coverage at a multiple of your income based on age.

Also, don't forget a stay-at-home parent: childcare, transportation, and household management have real replacement costs, commonly justifying $250,000–$500,000 in coverage even with no salary to replace.

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