Updated for 2026 • Insurance • 7 min read
Everyone says "10x salary" for life insurance. I make $85k, so I bought $850k term. Thought I was covered.
Then my friend who's a financial planner ran DIME formula on me. DIME showed I need $1,190,000. I was underinsured by $340,000.
If I died, my family would run out of money in 7 years. Not okay.
Here are both formulas, do this in 5 minutes.
The 10x Rule (Quick and Dirty)
Salary x 10. $85k x 10 = $850k. Simple but flawed. Doesn't account for debt, kids, mortgage.
My 10x gave $850k. Sounds big, but let's check DIME.
The DIME Formula (What I Use Now)
D = Debt: All debts except mortgage ($18k car + $7k student loans = $25k)
I = Income: Salary x years until kids 18. Youngest is 2, so 16 years x $85k = $1,360,000 but DIME uses 10 years of income for spouse to adjust = $850k
M = Mortgage: Remaining balance ($287,000)
E = Education: $50k per kid x 2 = $100k
Total = D $25k + I $850k + M $287k + E $100k = $1,262,000
Minus existing savings $72k = $1,190,000 needed
I was short $340k. I added a second 15-year term policy for $400k for $21/month. Now fully covered for $55/month total ($34 + $21).
📌 Term vs Whole: Don't get scammed → Term vs Whole Life Insurance: Why I Chose Term and Invested the Difference
My Exact Coverage (Copy This If You Have Kids)
I have $850k 20-year term (until kids 22 and 25) + $400k 15-year term (until kids 17 and 20). Laddered. After 15 years, kids older, mortgage lower, I only need $850k. After 20 years, kids gone, house paid, I need $0 or small $100k final expense.
This ladder saves money vs one big 30-year policy. $1.25M 30-year would be $87/month. My ladder is $55/month now, drops to $34/month after 15 years. Saves $4,800 over 30 years.
Do DIME tonight. Takes 5 minutes. Most dads I know are underinsured by $300k-$500k because they used 10x.
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