Life Insurance• 2026-08-15• 6 min read
How Much Life Insurance Do I Need?
One of the most common questions clients ask our Cherry Hill office is: 'How much life insurance do I actually need?' While rule-of-thumb formulas (like 10 times your salary) offer a rough starting point, the right coverage amount depends on your specific financial obligations, family goals, and existing assets.
The DIME Method: A Practical Framework
A helpful way to evaluate life insurance needs is the DIME method — evaluating Debt, Income, Mortgage, and Education:
• Debt: Sum all outstanding non-mortgage debts (car loans, credit cards, personal loans, student loans).
• Income: Multiply your annual income by the number of years your family would need financial support (e.g., until children finish college or your spouse reaches retirement).
• Mortgage: Include the remaining balance on your home mortgage so your family can stay in their home without housing payment stress.
• Education: Estimate future college costs for children (typically $100,000–$250,000 per child depending on school type).
Don't Forget Non-Working Spouses
Stay-at-home parents provide critical services — childcare, household management, transportation, and eldercare. Replacing those services out of pocket would carry substantial financial cost. Insuring a non-working spouse is essential to protecting the family's financial stability.
Subtract Existing Assets
Once you calculate your total financial obligations, subtract existing liquid assets (savings, investments, existing life insurance) that would be available to meet those needs. The remaining gap is the net life insurance coverage required.
Summary & Next Steps
Life insurance needs evolve as life changes — getting married, buying a home, having children, or starting a business. We recommend reviewing your coverage every 2–3 years or after major life events with a licensed independent advisor.