To Know If You Have Adequate Life Insurance It Only Takes a DIME

A recent Mutual of Omaha survey of life insurance customers reveals 60% believe they have enough coverage to meet their family’s needs.* But just believing they have enough doesn’t necessarily make it so, and many could be falling short of the actual coverage amount they need to protect their family and financial legacy.

So how can you be sure your life insurance meets your family’s needs?

One common strategy often employed by providers is to start by totaling a family’s debt, income, mortgage and education expenses. Known as DIME, this quick evaluation is a simple way to arrive at an amount of coverage that’s in the ballpark of what a family will need.

“DIME can be a real eye-opener,” said Mutual of Omaha Financial Advisor Ted Rifkin. “I’ve shown many clients that the coverage they thought was adequate actually wouldn’t be enough to protect their family if the policy holder’s income suddenly stopped.”

While adding up debt, mortgage payments and education expenses results in a straightforward number, where many people fall short is when they factor in their income. Everyone’s needs will be different, but Rifkin recommends having enough coverage to provide multiple years of income. For parents with young children, one recommendation is to use the number of years until your youngest child turns 18. But even that may not be ideal, because kids may need financial support longer than that.

It’s also important to figure in final expense costs that could run tens of thousands of dollars. You may also need to figure in childcare, taxes and other expenses unique to your family’s situation.

In addition to a DIME assessment, Rifkin said there are a number of free online calculators that provide accurate assessments of a family’s true life insurance needs.

*Findings are from a September 2023 Mutual Insights survey of 400 U.S. consumers ages 18-77.