该买多少保额：三种算法How Much Coverage: Three Ways to Size It

Coverage is not "what I can afford," nor "what my friend bought." It is a subtraction problem: what your family will need, minus what your family already has. Three methods, from rough to precise.

1. Income Multiple (Fastest, Roughest)

Multiply annual income by a factor — 10 to 15 times is a commonly cited range.

It takes thirty seconds and is useful for one thing: telling you whether your current coverage is obviously insufficient. Its weakness is equally clear — it ignores your debts, your children's ages, and your spouse's income. Two households with identical incomes, one carrying a thirty-year mortgage with two toddlers and one mortgage-free with grown children, get the same answer.

2. DIME (More Complete)

Add up four categories:

• D — Debt: mortgage balance, auto loans, credit cards, student loans, plus final expenses
• I — Income replacement: how many years of income must be replaced — commonly until the youngest child is financially independent, or until a spouse reaches retirement age
• M — Mortgage: if not already captured above, add the mortgage balance here (avoid double-counting)
• E — Education: projected education costs for the children

Then subtract what already exists: current policy face amounts, savings and investment accounts, and a spouse's ongoing income. The remainder is the gap.

3. Needs-Gap Analysis (Closest to Reality)

An extension of DIME that adds time and inflation: lay out year by year the household's future outflows (living costs, education, mortgage) against its inflows (spouse's income, existing assets, Social Security survivor benefits), then identify which year a shortfall begins, how large it is, and how long it lasts.

It takes the most work, but it is the only method that can answer questions like "how long do I actually need this coverage to last?"

Three Common Miscalculations

• Insuring only the earner. If the parent providing full-time care is gone, childcare, commuting, and household work must be purchased. That expense is real
• Forgetting to subtract existing assets. Group life coverage through work and accessible savings should both reduce the gap — otherwise you over-buy
• Calculating once and never revisiting. A new job, a new child, a home purchase, a paid-off mortgage — each one changes the gap

After the Number

Coverage amount is the conclusion of a needs analysis, not its starting point. Only after the gap is established does it make sense to discuss which tool fills it and what the budget can sustain. Reversing that order is how people end up with something that does not fit.

Figures and assumptions should be worked out against your actual circumstances; consult your CPA or attorney on tax and estate matters.