DIME method — Debt + Income × years + Mortgage + Education, minus existing coverage.
DIME = Debt + Income × replacement years + Mortgage + Education-per-child × children, then subtract existing coverage. The income-replacement leg is usually the largest line; pick a horizon that covers the years until your dependents are financially self-sufficient.
Life insurance is an indemnity contract against the financial fallout of a single specific event: the policy-holder's premature death. The hard part is not the contract — it is sizing the policy. Buy too little and the survivors run out of money before the youngest child finishes school; buy too much and you spend a decade overpaying for coverage that nobody will ever need. The literature has converged on three rough sizing heuristics — the multiplier rule, the human-life-value method, and the DIME method — and the DIME method has become the default in mainstream financial-planning education because it is the only one that explicitly itemises the obligations the death benefit is supposed to discharge. This calculator runs the DIME method end-to-end, exposes the breakdown so you can see which leg dominates, and offers three preset profiles that span the lifecycle from young family to pre-retirement.
DIME stands for Debt + Income × years + Mortgage + Education. The full closed form is:
coverage = debt + (annual_income × income_years) + mortgage_balance + (education_per_child × children) + final_expenses − existing_coverage
The debt term covers non-mortgage liabilities the survivors would otherwise have to service: credit-card balances, student loans, auto loans, personal lines of credit, business guarantees. The income term replaces the lost paycheque for the number of years your dependents need it — typically until the youngest child reaches financial independence, or until a surviving spouse reaches their own retirement age. The mortgage term is the outstanding principal on the primary residence, which the calculator treats as an in-full payoff rather than a refinance because most planning conversations assume the survivors stay in the home. The education term funds each child's tertiary studies, multiplied by the number of children. Final expenses — funeral costs, probate fees, immediate medical bills not covered by health insurance — are added on top. Existing coverage (an in-force individual policy, an employer-provided group policy, mortgage life insurance riders) is then subtracted: only the gap needs new coverage.
Two competing heuristics are worth naming. The multiplier rule says "buy 10× to 15× annual income" — quick, mortgage-blind, and systematically wrong for childless households (over-insured) and for large mortgages (under-insured). The human-life-value (HLV) method discounts the lifetime stream of expected after-tax earnings to present value using a real discount rate; it is theoretically the cleanest answer but requires assumptions about salary growth, inflation, and discount rate that most households cannot defend. DIME wins on transparency: every euro of the recommended coverage is mapped to a specific obligation the survivors would face.
Work through the three input blocks in order. The Income & dependents block sets the largest leg of the calculation: enter your annual income in your local currency, choose how many years of income you want to replace (10 is the typical default for a household with school-aged children; pre-retirement profiles use 3–5 years), enter the number of children you want to fund, and enter the per-child education budget (the calculator assumes the same amount per child — adjust the average if your children have very different education paths). The Debts & mortgage block needs your current mortgage balance and the sum of all non-mortgage debts. The Final expenses & existing coverage block needs an estimate for the funeral and immediate post-death costs and the total of all in-force coverage already on your life — including any group policy provided by your employer (typically 1× to 2× salary). The Results panel returns the recommended coverage as the headline number, breaks the calculation down into its five additive legs and the existing-coverage offset, and plots the breakdown as a horizontal stacked bar so you can see at a glance which obligation is driving the bulk of the need.
A dual-income household: one earner at € 70 000 per year, two children aged 4 and 7, € 280 000 left on the mortgage, € 25 000 in non-mortgage debt (a car loan and a student loan), € 80 000 budgeted per child for studies, € 15 000 for final expenses, no existing coverage. The DIME math: 25 000 + (70 000 × 15) + 280 000 + (80 000 × 2) + 15 000 = 25 000 + 1 050 000 + 280 000 + 160 000 + 15 000 = € 1 530 000 of recommended coverage. Income replacement is 69 % of the total — exactly what you expect for a young family with a long earning horizon ahead. A 20-year level-term policy at this face amount runs roughly € 50–80 per month for a healthy 35-year-old non-smoker; the same coverage as whole-life would cost ten to fifteen times more.
Now flip the example to pre-retirement: € 110 000 income but only 5 income-years to replace, € 80 000 mortgage left, one child, € 60 000 for their remaining education, € 200 000 of existing employer coverage. The math: 5 000 + 550 000 + 80 000 + 60 000 + 15 000 − 200 000 = € 510 000. Same person, same family, fifteen years later — the need is roughly one third of what it was, because the income horizon is shorter and existing coverage has accumulated.
Group coverage is portable only sometimes. The 2× salary policy your employer provides typically lapses within 31 days of leaving the job. If you are counting on it for any non-trivial portion of your DIME need, the day you change jobs you are exposed; planning a gap-filler is part of the calculation.
Income replacement is not the same as income. Net of taxes and the deceased's own consumption, household-level lost income is closer to 65–75 % of the gross salary. Some advisors size the income leg using net rather than gross figures; this calculator uses gross to match the DIME convention but you can enter a reduced figure if you prefer the net approach.
Inflation is unmodelled. A € 1.5 M payout 20 years from now at 2 % inflation is the equivalent of about € 1.0 M today. Some advisors uplift the income leg by an annuity factor that compounds the income years at an expected real return; the simple-multiplication DIME version under-reserves by 5–15 % over a long horizon.
Education inflation is real. US private-college tuition has compounded at 5–6 % annually for thirty years. If you are funding studies 15 years out, today's € 80 000 budget will be closer to € 165 000 in nominal terms.
Children are not the only dependents. An aging parent, a disabled adult sibling, or a non-working spouse with limited earnings history all add to the income-replacement leg. The calculator's children input is a proxy; widen the income-years horizon if you support adults too.
Term length must match the horizon. A 20-year term policy bought at age 35 covers exactly the years when DIME-need is highest and lapses just as the children become financially independent and the mortgage is largely paid off. Mismatched term (10 years when you have 18-year-olds at home) is one of the most common sizing mistakes.
In the United States, level-term life is the default product (10/15/20/25/30-year terms), priced at a small fraction of permanent (whole-life or universal-life) coverage; the DIME method maps directly onto this market. The death benefit is income-tax-free to the beneficiary under IRC § 101(a). Whole-life buyers should still size the death benefit using DIME — the savings/cash-value component is a separate decision.
In France, the term assurance-vie is famously confusing because it labels two completely different products with the same name. The everyday assurance-vie contract is a tax-advantaged savings vehicle (sometimes including a death benefit kicker but mainly a pension/heritage tool with capped 152 500 € exemption per beneficiary under article 990 I CGI). What this calculator sizes — pure death-benefit coverage — is sold in France as assurance-décès or assurance temporaire décès, a much smaller and shorter market than the US term-life industry. Many French households are under-insured on the death-benefit side because they assume their assurance-vie covers them; the contracts mostly do not.
In the United Kingdom, the equivalent products are level-term assurance and whole-of-life policies, with mortgage-linked decreasing-term assurance specifically sized to the mortgage leg of DIME. UK death benefits are paid free of income tax and, when the policy is written in trust, free of inheritance tax.
The DIME framework is country-agnostic: every jurisdiction has debt, income, mortgage, and education obligations to discharge. What differs is the product mix and the tax treatment, not the sizing arithmetic.