Buying too little leaves your family exposed; buying too much wastes money. The right number covers what your family would lose if your income disappeared — no more, no less.
The quick rule of thumb
A common starting point is 10–15× your annual income. Earning $70,000? That points to roughly $700,000–$1,000,000 of coverage. It's fast, but it ignores your specific debts and goals — so treat it as a floor, not a final answer.
The DIME method (more accurate)
Add up four things:
- Debt — credit cards, car loans, personal loans.
- Income — your salary × the years your family needs it.
- Mortgage — the remaining balance on your home.
- Education — future costs like your kids' college.
Then subtract savings and any existing coverage. The result is a tailored estimate. Try our free calculator to do the math in seconds.
A worked example
Maria earns $80,000, has 15 years until her kids are independent, a $250,000 mortgage, and wants $100,000 set aside for college. She has $40,000 in savings.
$80,000 × 15 + $250,000 + $100,000 − $40,000 = $1,510,000. She'd round to $1.5M of 20-year term.
Don't forget the non-earning spouse
If a stay-at-home parent passed away, the surviving partner would face real costs — childcare, housekeeping, transportation. Coverage of $250,000–$500,000 is common and sensible.