The DIME Method
Apr 19, 2017
There are a variety of ways one can calculate how much life insurance coverage an individual needs. Some agents abide by the rule of multiplying your income by 10. Others take that method a bit further and advise one should calculate an additional $100,000 per child. One of our favorite methods is known as the DIME method. It is a slightly more detailed way of calculating how much coverage is needed.
Debt: Add up any of their outstanding debts and future funeral expenses.
Income: Figure out how many years their family would need financial support. Take that number and multiply it by their income. We prefer this method because the rule of 10 can be limiting. Some families would require financial support for longer than 10 years. This way, you are customizing their coverage based on their family's specific needs.
Mortgage: Add the amount they still owe on their mortgage.
Education: Calculate the amount of money it would cost to provide their children with higher education. Keep in mind, this doesn’t just mean tuition. Do not forget to include cost of books, housing, and meal plans.