DEBT
What types of personal debt should be included when calculating life insurance coverage?
Credit cards, student loans, personal loans
What does the “I” in DIME stand for?
Income Replacement
What does the “M” in DIME stand for?
Mortgage
What does the “E” in DIME stand for?
Education
Carlos earns $50K/year, has $5K in debt, $120K left on his mortgage, and wants 8 years of income replacement. No kids. What is the total coverage needed?
D: $5K + I: $400K + M: $120K + E: $0 → Total = $525,000
True or False: All debt is automatically forgiven after death.
False
If a person earns $60K/year and wants to replace 10 years of income, how much do they need?
$600,000
Why should the remaining balance on a mortgage be factored into life insurance needs?
To allow the family to stay in their home
What is the average annual cost of a 4-year public college (tuition, room & board)?
About $25,000–$30,000
Monique earns $75K/year, has $20K in debt, $300K mortgage, and plans to send her daughter to college ($90K). She wants 12 years of income replaced. What is the total coverage needed?
D: $20K + I: $900K + M: $300K + E: $90K → Total = $1,310,000
Name one overlooked type of debt that can burden families after a death.
Medical bills
What two main factors determine how much income should be replaced?
Annual income and number of years
What is the average mortgage balance in the U.S. today (approx)?
Around $236,000–$250,000
How much should a family set aside for college if they have two children and want to cover full costs?
$200,000–$250,000
The Nguyens are a dual-income family. One spouse earns $90K/year. They have $15K in debt, $400K mortgage, and want to send 2 kids to college at $100K each. 10 years of income replacement needed.
D: $15K + I: $900K + M: $400K + E: $200K → Total = $1,515,000
If someone has $12,000 in credit card debt and $25,000 in student loans, how much debt coverage should they have?
$37,000
Name one reason income replacement is crucial for families after a provider’s death.
To maintain lifestyle, pay bills, or avoid financial hardship
A client has 18 years left on a $1,400/month mortgage. How much should be added for mortgage coverage?
$302,400
Name one reason why families include education in insurance planning.
To ensure kids can attend college if a parent dies
Latasha, a single mom, earns $60K/year, has $10K in debt, no mortgage (rents), and 1 child with college expenses of $80K. She wants 15 years of income covered. What is the total coverage needed?
D: $10K + I: $900K + M: $0 + E: $80K → Total = $990,000
Why is it important to include business debt in a life insurance calculation?
Because families may be liable or the business could fail without the income
True or False: Net income should be used when calculating income replacement.
False (Gross income is standard)
What other housing expenses (besides the mortgage) might someone consider covering in their policy?
Taxes, insurance, HOA fees, maintenance
Besides tuition, name two additional education-related expenses.
Books, housing, transportation, technology
Marcus earns $100K/year, has $30K in business debt, $500K left on a mortgage, and 3 kids who each need $85K for college. He wants 20 years of income replaced. What is the total coverage needed?
D: $30K + I: $2M + M: $500K + E: $255K → Total = $2,785,000