A DIME for Your Time? How Much Life Insurance Do You Need?

Updated on April 15, 2020
travishelmboldt profile image

Travis has been a husband and father for over 15 years. Served in the Army National Guard for 10 years. Currently a life insurance agent.

A Consumer's Self-Help Guide to Purchasing Adequate Life Insurance Coverage

Two Types of Life Insurance Discussed in This Guide

Final Expense Whole Life: A life insurance policy that guarantees coverage for the life of the client or when the client reaches the age of 100. As long as the premiums are paid, the policy will remain in force. This is the most common whole life insurance policy. Most commonly, these policies begin to build a cash value at the beginning of the policy’s third year. After a policy begins accruing a cash value, a client may borrow against the cash value. But the borrowed amount must be repaid before the client passes away, or the borrowed amount will be deducted from the death benefit. The face values or death benefits are a lot smaller than traditional whole life policies. Depending on the company, death benefits can go as high as $50,000. The most common riders that can be attached to these policies include child/grandchild benefits, accidental death, and accelerated benefit.

Term Life: A life insurance policy that guarantees coverage for a certain period of time: ten, twenty, thirty, or even up to forty-five years. As long as the premiums are paid, the policy will remain in force. These policies tend to have higher face amounts and are more affordable than traditional whole life. The drawbacks to having a term policy are that the client is only covered for a certain period of time and the policy will not accrue any cash value. Some carriers offer riders that can be attached to the policy, like accelerated benefit, accidental death, and return of premiums.

How Do You Know If You Have Enough Life Insurance?

There are tons of statistics all over the internet, with each one having their own definition of life insurance gap. Some will say 70%, or some will say 80%, while some will say as high as 85% of American either do not have life insurance coverage or do not have enough. This is a major, major problem in the US. There are so many unanswered questions when faced with a broad statistic such as this. Who pays the funeral costs and other final expenses? What happens to the household when the breadwinner passes away? How will the mortgage get paid? What about college for the kids? The list could go on and on.

Many Americans fear that life insurance costs too much. And that they don’t know a lot about life insurance in general. A good and honest agent can help answer these questions.

Life insurance is supposed to benefit the beneficiary, not the insured. The beneficiary could be a wife, a husband, a close relative, or even a close friend. Some will leave money to their children or grandchildren. Some may even leave money for a nonprofit organization such as a church. Some will set up a trust for their children or grandchildren.

Medical Information That Affects Your Policy

High face amounts for either term or traditional whole life policies may require the client to have a physical examination from a doctor, or have blood drawn by a nurse that will come to your house, or both. It will depend on the company and the face amount. Usually, the higher the face amount, the more health tests will be required.

Some carriers will cancel the policy without notice. And some will cancel with a notice. Please read the fine print.

Almost all policies will have a "contestability" period of two years. For example, if a smoker purchases a policy as a non-smoker, and if that client is later diagnosed with any illness that is related to smoking, the company may either cancel the policy or issue another policy with a higher premium to cover for the higher risk, as well as charge additional fees to cover for the time the client was covered as a non-smoker.

Almost all policies will not cover suicide.

All medical information that is recorded by a doctor will be reported to the MIB, (Medical Information Bureau). Only insurance agents have access to the MIB; it is the agent, not the agency he works for that has access.

Agents ask health-related questions regarding the policy application. If a client is dishonest about their health, trying to seek a cheaper premium, it is not the fault of the agent. But, if an agent is dishonest with the client and disregards the health questions on the application, the fault is on the agent. If the carrier finds out that it is the agent's fault the information is incorrect, the agent will have their commissions charged back to the company, lose their contract with the carrier, and possibly lose their license to sell insurance. A dishonest agent can be charged with a felony, face jail time and fines, and pay out heavy legal fees.

So, honesty is always the best policy. The MIB was established to keep things honest between the client, agent, and company. An honest agent should always keep the client’s best in mind interest when presenting a policy.

D. I. M. E.: How Much of What Kinds of Coverage

Below is a guide that will help decide how much coverage you may need. All amounts are fictional and may not reflect your exact coverage needs. So please, use the guide and place your needs in each category.

The DIME acronym is the best one that has worked for me as an agent. Many other agents use similar acronyms, but, I feel that this one keeps things simple.

D = Death Benefit. A final expense whole life policy to cover funeral costs and other final expenses.

I = Income protection. A term policy to cover for the years the breadwinner plans on working before retirement. The face amount should be the annual salary times the amount of years the breadwinner wants to cover for loss of income.

M = Mortgage protection. A term policy, or a stack of term policies, with a total face covering the costs of whole or part of the mortgage of the house.

E = Educational tuition and expenses. A term policy with the face amount to cover the costs associated with college tuition and expenses for your children or grandchildren.

Here’s an example of how it should look like.

D = $15,000. Most common, middle-of-the-road face amount. This will cover all or most of the burial cost.

I = $225,000 ($45,000 annual salary x 5 years)


M = $125,000 (mortgage for 20 years)


E = $65,000 (all or most of the cost of an associate’s degree for one child).

If your house is paid for and you don’t have a mortgage, or you pay rent, you won’t have to worry about mortgage protection, but you still have income protection to think about. If you do have a mortgage, try to figure out what is more important to you and your loved one: income protection or mortgage protection? The choice is up to you. There aren’t any wrong answers here.

If you have children or grandchildren, add in the education expenses. The amount is totally up to you. If you don’t have any children or grandchildren, or if they have a scholarship, you can disregard this item.

So now, let’s do a total of everything to show you what kinds of policies would work best to fit your needs. Here are a few examples.

D. I. M. E. Example 1

D: $15,000 Whole Life Final Expense policy.

Income protection: $45,000 X 5 = $225,000.

Mortgage Protection: Client owns home or client pays rent.

Education: Client has one child and would like to provide $65,000 toward college expenses.

Income protection amount plus education = $290,000. Client plans to retire in thirty years, so he gets a 30-year term life insurance in the amount of $290,000, and a whole life final expense policy for $15,000.

D. I. M. E. Example 2

D = $15,000 Whole Life Final Expense

Income Protection=Client chose mortgage protection instead.

Mortgage Protection = $125,000 (mortgage for 20 years).

Education = Client has no children or children have scholarships.

The mortgage is for twenty years, so he takes out a 20-year term policy in the amount of $125,000, and a whole life final expense policy for $15,000.

Just look at how simple it is to work out what you really need. Again, the figures above are only examples. Your situation may be different than what has been shown. But, use the DIME to figure out what it would cost your loved ones when your time expires. A DIME for your time?

Keep in Mind

This is a basic self-help guide to educate consumers about some of the common types of life insurance. It is not the intention of this guide to sell a particular insurance product or to promote any insurance company or carrier. All figures and dollar amounts are examples, completely hypothetical, and should not serve as a one size fits all scenario. Every person has different needs when it comes to life insurance.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2018 Travis Helmboldt


    0 of 8192 characters used
    Post Comment

    No comments yet.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, toughnickel.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://maven.io/company/pages/privacy

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
    ClickscoThis is a data management platform studying reader behavior (Privacy Policy)