How much term life insurance do you need?
The DIME method adds Debts, Income replacement (years × salary), Mortgage balance, and Education costs, then subtracts existing assets and coverage. A 35-year-old earning $90K with a $350K mortgage and two kids typically lands between $1M and $1.5M of coverage — far more than most people carry.
- • Match the term to the obligation: a 30-year mortgage wants a 30-year term.
- • Laddering two smaller policies (10-yr + 30-yr) can cut total cost.
- • Stay-at-home parents need coverage too — childcare replacement runs $20K–40K/yr.
Why term beats whole life for most families
Term is 5–15× cheaper per dollar of coverage because it builds no cash value — it is pure risk transfer. 'Buy term and invest the difference' outperforms whole life for most households, since the savings invested at even 5–6% compound well past typical whole-life cash values.
Related guides
Long-form playbooks on the same topic, written by the RevenueLab editorial team.
FAQ
How much is a $500,000 term life policy?
A healthy 35-year-old non-smoker pays roughly $25–30/month for a 20-year, $500K term policy. The same policy at 45 runs $55–75/month, and at 55 often $150–250/month. Tobacco use roughly doubles the price.
What happens when the term ends?
Coverage simply stops. Most policies offer conversion to permanent insurance without new medical underwriting, and renewal at annually increasing (much higher) rates. If you still need coverage at expiry, a new policy requires re-qualifying at your older age.
Do I need a medical exam?
Often not anymore. Accelerated underwriting approves many healthy applicants under 50 for up to $1–3M with no exam, using prescription and motor-vehicle records instead. Larger amounts or older ages still typically require a paramedical exam.
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