1. You and your earning years

Term life only matters until financial obligations are gone. For most people that's until the youngest child is grown and the mortgage is paid — typically age 60-65.

Your current age

Planned retirement age

HLV uses the years remaining to retirement as the earning horizon. Conservative practice uses age 65 even if you plan to retire earlier.

Annual gross income ($)

Expected annual income growth rate

Discount rate for HLV (real)

HLV discounts future earnings back to today. A higher discount rate produces a lower HLV. 4% real (approximately a 60/40 portfolio return) is a defensible practitioner default.

Health class (for premium estimate)

Health class drives premium more than amount. Going from "Standard" to "Preferred Plus" can cut premium by 30-50%. Be honest — if the medical exam disqualifies you, the application is denied and that fact follows you.

2. Debt + Mortgage

The "D" and "M" of DIME. Everything that would have to be paid off so the surviving family isn't carrying it.

Non-mortgage debt ($)

Credit cards, car loans, student loans, personal loans, HELOC balance (non-mortgage portion).

Mortgage balance ($)

Current principal balance. DIME pays off the whole mortgage so the surviving spouse has a free-and-clear house.

3. Education obligations

The "E" of DIME. Per-child funding target through college, in today's dollars.

Number of dependent children

Education funding target per child ($)

Public in-state ~$120K, private ~$240K, elite ~$340K (4-yr undergrad in 2025 dollars). Use what you intend to fund, not what college costs.

4. Current coverage

Sum of all in-force term and permanent life insurance, including employer group coverage. Employer coverage is portable in some states but not all — treat it as bridge coverage, not core.

Current total in-force coverage ($)

Liquid assets that offset coverage need ($)

Cash, brokerage, 401(k) accessible without penalty. Not the house. Not retirement accounts the surviving spouse needs to live on.

Two methods, side by side

DIME method

—

Debt + 10× Income + Mortgage + Education

HLV method

—

PV of future earnings to retirement

DIME — the line-by-line build

HLV — the present-value calculation

Human Life Value is the present value of your future earnings, discounted at your assumed discount rate. The classical formula sums year-by-year income from today to retirement, each year discounted to today's dollars. We strip out self-consumption (a working adult spends ~30% of their gross income on themselves — food, clothing, transportation, healthcare) so the HLV reflects what the family loses, not what the deceased earned.

Your numbers

Indicative premium ranges

These are rough industry-average indicative premiums for a healthy non-smoker (or your selected health class). Actual quotes vary by carrier, state, exam results, and underwriting cycle. Always get 3+ quotes from independent agents (term-life-online aggregators are fine starting points) — spread between carriers can be 30%+ for the same coverage.

The laddering strategy

You don't need the same amount of coverage for the next 30 years. The mortgage shrinks, the kids grow up, the retirement nest egg builds. A ladder — mix of 10-yr, 20-yr, and 30-yr term policies — matches coverage to need and reduces total premium ~20-30% vs a single 30-yr policy at the full amount.

DIG DEEPER · INSTITUTE TOOLS & GUIDES

Where to go next

Estate Planning Desk → Estate Planning Desk — life insurance in trust (ILIT), beneficiary structuring, the "second-to-die" estate-tax product.
Family Financial Planning Guide → Family Financial Planning Guide — how life insurance fits in the protection stack alongside LTD, umbrella, health.
Long-Term Disability sizing → LTD Sizing Tool — statistically more likely than death during working years; the under-purchased coverage.
Umbrella / Excess Liability → Umbrella Sizing — the other low-premium, high-impact protection.
Retirement readiness → Retirement Readiness Score — how the surviving spouse's retirement gap interacts with life-insurance coverage need.
Athlete Wealth Playbook → Athlete Wealth Playbook — the higher coverage need during the short earning window.
For everything else → All Institute tools.

Methodology & caveats

DIME — the line-by-line formula ›

DIME is the industry-standard "needs analysis" formula. The components:

D — Debt: Non-mortgage debt that would have to be paid off (credit cards, car loans, student loans).
I — Income: 10× annual gross income. The "10×" multiplier is convention: it approximates 10-15 years of income replacement at a 7-10% withdrawal rate.
M — Mortgage: Current mortgage balance. Pays off the family home so the survivor has free-and-clear housing.
E — Education: Per-child college funding target, summed across all dependent children.

DIME tends to overstate coverage need for high earners (the 10× income is often more than they actually need) and understate it for households with long earning horizons (a 35-year-old has 30 years of earnings ahead at growth rates DIME ignores).

The Institute uses DIME as one of two answers. The other is HLV.

HLV — the present-value formula ›

Human Life Value calculates the present value of your future earnings, net of self-consumption:

HLV = Σ_{y=1 to Y} [Income × (1+g)^y × (1 − self-cons) / (1+d)^y]

Where g is income growth, d is discount rate, Y is years to retirement, and self-cons is the fraction of income the deceased would have spent on themselves (we default to 30%).

HLV tends to be the larger number for young high earners (decades of compounding income, discounted at a moderate rate, summed). For older earners closer to retirement, DIME usually exceeds HLV.

The defensible practitioner answer is "the larger of DIME and HLV, with the smaller as the floor." If your DIME is $1.5M and HLV is $2.5M, $2M-$2.5M is the right ballpark.

Why term beats whole life for almost everyone ›

This is one of the few topics in personal finance where the practitioner answer is unambiguous: buy term, invest the difference. The math:

A healthy 35-year-old non-smoker can buy $1M of 20-year term for roughly $35-50/month. The equivalent $1M of whole life (or universal life, or indexed universal life) costs $800-1,200/month. The premium difference is $750-1,150/month, every month, for 20 years.

If you invest that $750-1,150/month at a 7% nominal return in a low-cost index fund, you end up with $400,000-$650,000 of investable assets after 20 years. That's your self-insurance. You no longer need death-benefit coverage because the family has the assets.

The agent's pitch for whole life is "forced savings + tax-deferred growth + permanent coverage." All three are real, all three are overstated:

Forced savings: If you can't save voluntarily, you have a behavior problem that whole-life premiums won't fix. You'll cancel the policy in year 3.
Tax-deferred growth: Real, but the internal rate of return on whole-life cash value is typically 2-4%. A taxable index fund earning 7% nominal, even after 15-20% LTCG, dominates.
Permanent coverage: You don't need permanent coverage once the kids are grown and the mortgage is paid. The whole point of term is to match coverage to need.

The legitimate use cases for whole life are narrow: estate-tax liquidity for HNW estates above the federal exemption (and even then, second-to-die is the structure), business-succession key-person coverage with a buy-sell agreement, and special-needs trust funding. For 95% of households, term is the right answer.

Laddering — matching coverage to need over time ›

If you need $2M today but only $500K in 20 years (mortgage paid, kids through college, retirement assets built), you don't need a 30-year $2M policy. A ladder is cheaper:

$500K of 30-year term — covers the long tail (final mortgage years, lingering obligations, replacement of remaining earnings to retirement).
$700K of 20-year term — layered on top, covers the middle decade.
$800K of 10-year term — layered on top, covers the first decade when coverage need is highest (young kids, full mortgage, peak earnings deficit).

Total in year 1: $2M coverage. Total in year 11: $1.2M. Total in year 21: $500K. Each layer drops off when no longer needed. The all-in premium is typically 20-30% lower than a single 30-yr $2M policy.

The downside: more paperwork, three medical exams in some cases (most carriers allow stacked policies from one exam), three policies to manage. For most households, the savings justify the complexity.

Self-consumption — why we strip out 30% of income in HLV ›

If you earn $150K and the family spends $150K on the household, the family doesn't actually lose $150K when you die — they lose what was being spent on the household minus what you were consuming yourself. A working adult typically consumes 25-35% of gross income on themselves (food, clothing, transportation, healthcare premiums attributable to them, personal entertainment, discretionary spend).

We default the self-consumption fraction to 30%, which is the SSA / actuarial-society conservative middle. Adjust upward for a high-earning single (closer to 40%); adjust downward for a sole-earner family with dependent spouse (closer to 20%).

This is why HLV is "what the family loses" not "what you earned." It's the right measure for life insurance need.

Disclosure. Not investment, tax, or insurance advice. We are not your advisor. This tool produces an educational planning estimate using the standard DIME and HLV methodologies. Premium estimates are rough industry-average indicative ranges for a healthy non-smoker (or your selected health class) as of early 2026; actual quotes vary by carrier, state, exam results, underwriting cycle, and your medical history. Always obtain 3+ quotes from independent agents. Consult a CFP, fiduciary insurance advisor, or fee-only life insurance consultant before purchasing. The Baratelli Institute does not sell insurance products and does not earn commissions on any referral.

How much term life do you need? Both practitioner methods, side by side.