By the time someone sits down with me about life insurance, they've usually already decided what kind they want — a question I break down in term vs. whole life vs. IUL. But the harder and more important question comes first: how much? Buy too little and you've quietly failed at the one job the policy exists to do. Buy too much and you're paying for a death benefit your family doesn't need instead of putting that money toward retirement or your kids.
The good news is that "how much" isn't a guessing game. There's a straightforward, honest way to arrive at a number — and it starts by throwing out the rule you've probably already heard.
Why "10 times your income" isn't the answer
The "buy 10 to 12 times your income" rule is popular because it's easy, and it's not wrong so much as it's blind. It ignores whether you have a $400,000 mortgage or none, whether your kids are 2 or 20, and whether you already carry coverage through work. Two neighbors in Reno earning the same $90,000 salary can genuinely need coverage that differs by hundreds of thousands of dollars. A rule of thumb is a fine gut check at the very end — it's a terrible place to start.
What actually works is a needs-based calculation: add up what your family would truly have to cover if your income disappeared tomorrow, then subtract what's already there to cover it. The most reliable shorthand for that is the DIME method.
The DIME method, step by step
DIME stands for Debt, Income, Mortgage, Education — the four pillars of what a family has to keep paying for whether or not you're still earning. Here's how each one works.
D — Debt and final expenses. Total your non-mortgage debts: car loans, credit cards, personal or medical debt, plus a realistic figure for funeral and final costs. That last piece is the exact job of a small final expense policy, but here we're rolling it into one number. Most families land somewhere between $20,000 and $60,000.
I — Income replacement. This is usually the biggest piece. Decide how many years your family would need your income and multiply. A common approach is your annual income times the number of years until your youngest child is independent — so a $90,000 earner with a newborn might replace 18 years, or roughly $1.6 million. If your spouse works and could carry part of the load, you can replace a percentage rather than the whole paycheck.
M — Mortgage. Add the remaining balance on your home so the house is paid off outright and your family never has to worry about the payment. In the Reno–Sparks and Carson City markets, where median home prices have pushed well past the national figure, this is often a $300,000–$500,000 line item on its own.
E — Education. Estimate what you'd want to provide toward each child's schooling. A useful placeholder is around $110,000 per child for four years of in-state tuition, fees, and living costs at a Nevada public university — adjust up for private school or graduate plans.
Add those four together and you have a gross coverage need. For our example family, that might look like $40,000 + $1,600,000 + $350,000 + $220,000 (two kids) = roughly $2.2 million. That number often surprises people — which is exactly why the "10x" shortcut so often falls short.
Now subtract what you already have
The gross need is only half the math. From it, subtract the resources your family could already draw on:
- Existing life insurance, including any individual policies already in force.
- Employer group life coverage — but count it carefully (more on that below).
- Liquid savings and investments earmarked for the family, not retirement accounts you'd want to preserve.
- Your spouse's income, if it would continue and you chose to replace less than 100% of yours.
Gross need minus existing resources equals the coverage gap — the death benefit you actually need to buy. For most working-age Nevada families I meet, that gap sits somewhere between $500,000 and $1.5 million, and it's almost always most affordable to fill with level term insurance sized to the years the need actually lasts.
The Nevada details that change the numbers
The framework is national, but the figures you plug in are local. Nevada has no state income tax, so a life insurance death benefit — already income-tax-free at the federal level — stretches a little further for your family here than it would in California next door. Nevada is also a community-property state, which affects how debts and assets are treated between spouses and is worth understanding when you set up ownership and, especially, your beneficiary designations. And local housing costs across Carson City, Reno, and the Carson Valley drive the mortgage pillar higher than the national average — which is why running your own numbers beats any generic calculator.
Where I see people get the number wrong
Leaning entirely on employer coverage. Group life through your job is a genuine benefit, but it's usually only one to two times salary, it disappears the day you leave or lose the job, and it isn't yours to keep. Count it as one line in your resources, never as the whole plan.
Insuring only the "breadwinner." A stay-at-home parent's childcare, driving, and household work would cost real money to replace — commonly $40,000 to $60,000 a year in our area. If that parent passed away, the surviving spouse would face those costs or have to cut back at work. Coverage on a non-earning parent protects the budget every bit as much as a paycheck does.
Forgetting income protection while you're alive. Life insurance solves for death, but you're statistically far more likely to be unable to work for a stretch due to illness or injury. That's a separate gap I cover in what happens to your paycheck if you can't work — worth sizing at the same time you size your life coverage.
Never revisiting it. The right number in 2026 is the wrong number after a new baby, a bigger mortgage, a raise, a divorce, or paying off the house. A quick review every few years — and after any major life event — keeps the coverage matched to the need instead of frozen at whatever you bought once.
How I'd walk you through it
It takes about twenty minutes and no sales pitch. We fill in your four DIME pillars with your real numbers, subtract the coverage and savings you already have, and land on an honest gap. Then — and only then — we talk about which type of policy and term length fit that gap and your budget, comparing carriers side by side because I'm independent.
Start with my life insurance page, read more about how I work, or browse the rest of the blog for more plain-English breakdowns.