Life insurance, a shield against financial turmoil in the wake of your absence, deserves careful consideration. But amidst the numbers and policies, how do you determine the right amount of coverage? The DIME method, a simple yet effective strategy, can be your guiding light.
DIME Decoded: The Four Pillars of Your Coverage
DIME stands for:
- Debts: Tally up all your outstanding debts, excluding your mortgage. Student loans, car loans, credit card balances – they all come under this umbrella.
- Income: Estimate how many years of income replacement your loved ones would need to maintain their lifestyle. Multiply your annual income by this number.
- Mortgage: Factor in the remaining balance of your mortgage to ensure its burden won't weigh them down.
- Education: If you have children, consider the future cost of their education and add it to the mix.
Remember, DIME is a starting point, not a rigid formula. Your unique circumstances and risk tolerance should play a role in determining the final coverage amount.
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Live prepared, live insured.