Frequently Asked Questions

Most financial planners recommend 10–12× your annual income as a starting point. More precise methods like the DIME method (Debt + Income + Mortgage + Education) or our income replacement calculator factor in your specific debts, dependents, and savings.

DIME stands for Debt, Income, Mortgage, and Education. You add up all debts (excluding your mortgage), the present value of income replacement for your earning years, your mortgage balance, and education funds for each child. The total is your recommended coverage amount.

Term life provides coverage for a fixed period (10–30 years) and has no cash value — it is significantly cheaper. Whole life (permanent insurance) covers you for life, builds a cash value component, and costs 5–15× more per month for the same coverage amount.

Most financial advisors recommend term life for income replacement. Buy coverage equal to what your family needs, for the years they need it. Whole life is more appropriate for estate planning, business succession, or legacy goals.

Employer coverage can supplement your need, but should not be your primary source — it is typically not portable and is lost if you change jobs or are laid off. Have individual portable coverage as your primary protection.

Insurers classify applicants into health classes (Preferred Plus, Preferred, Standard Plus, Standard) based on health history, family history, BMI, cholesterol, blood pressure, and tobacco use. Preferred Plus applicants pay 30–50% less than Standard rates.

Federal income tax: generally no — death benefits paid to a named beneficiary are income-tax-free. Estate tax: the benefit may be included in the estate if the insured owned the policy. An irrevocable life insurance trust (ILIT) can help avoid this.

Yes. Layering policies (e.g., a 30-year policy + a 20-year policy) is a common strategy to have higher coverage during high-need years while reducing premiums as obligations decrease over time.

The earlier the better. Premiums increase with age, and health conditions can raise costs significantly. Most planners recommend securing coverage in your 20s or 30s when premiums are lowest.

Recalculate whenever a major life event changes your needs — a new child, a mortgage refinance or new home purchase, a significant income change, or a job change that affects employer coverage. Absent a major event, an annual check is a reasonable habit since needs drift gradually over time.

Often yes, even without a salary to replace. A stay-at-home parent's death typically requires the surviving parent to pay for childcare, household management, and related services that were previously unpaid. Estimating the cost of replacing those services for the years still needed is a reasonable way to size this coverage.

Include debts your family would still owe after your death: credit card balances, auto loans, student loans (check whether they're federal loans that may be discharged on death, or private loans that may not be), personal loans, and your mortgage. Exclude debts tied only to an asset your family plans to sell or return.

Generally exclude retirement accounts (401(k), IRA) unless you'd genuinely liquidate them early despite taxes and penalties, and exclude home equity since accessing it requires selling or refinancing. Only count savings and investments your family could realistically access quickly.

Match the term length to how long the underlying need lasts — commonly the number of years until your mortgage is paid off or your youngest child is financially independent, whichever is longer. Some families layer a shorter term for near-term debts with a longer term for income replacement instead of buying one length for everything.

These calculators are educational estimates, not underwriting. Talk to a licensed professional when you're ready to apply for an actual policy, when your situation involves complexity these tools don't model (business ownership, estate tax exposure, a dependent with special needs, non-standard health history), or when you want a second opinion on how much of your calculated need to actually insure given your budget.