There is no universal number, and the common shortcuts are unreliable. Ten times salary happens to land near the right answer for some households and badly wrong for others: someone with a large mortgage and young children needs far more, and someone with no dependants and no debt may need far less.
| Component | What it covers |
|---|---|
| Debt | Credit cards, car loans, medical bills, funeral costs |
| Income | Your annual income multiplied by the years your family would need it |
| Mortgage | The balance left on your home |
| Education | What you would want to cover for schooling or college |
How it works
DIME is a checklist rather than a formula. It makes sure the four things that usually sink a surviving household are all on the page instead of guessing at a round number. Income replacement is normally the largest component by a wide margin, and that surprises people. A household that loses an earner does not lose one year of income; it loses every year until the people depending on it can stand alone.
What changes it
Cover through an employer is worth counting but is rarely the answer on its own. It usually ends when the job does, is often only one or two times salary, and almost never follows you to a new employer. Treating it as a layer rather than as the policy is what keeps families from discovering the gap at the worst possible moment.
What to do next
Work out your own figure rather than accepting a rule of thumb, then decide separately what kind of policy fits the budget and the timeframe. How much cover you need and which policy to buy are two different questions, and answering them in that order usually costs less.
Read the full guide: Life insurance for South Florida families
Related questions
Is ten times my salary a good rule?
It is a shortcut. It lands near the right answer for some households and far from it for others, which is why building the figure from your own numbers is better.
Should I count the life insurance from my job?
Count it, but know what it is. It usually ends with the job and is rarely enough on its own.
Does term or whole life change the amount I need?
No. The amount is how much cover your household needs. Which type of policy to buy is a separate question about budget and duration.
This page explains published rules and figures, with the source for each one. It is not advice about your own situation.