You and your spouse are in good health and have reasonably secure jobs. Each of you makes about $25,000 annually. You own a home with an $140,000 mortgage, and you owe $14,000 on car loans, $4,800 in personal debt, and $3,500 in credit card loans. Funeral expenses are estimated at $7,000. You have no other debt. You have no plans to increase the size of your family in the near future. Estimate your total insurance needs using the DINK method

$88,150

Explanation:

DINK method for insurance sums one half of all the debt plus funeral expenses. Thus,

Using DINK method

One half of mortgage, 140,000 = 70000

One half of car loan, 14000 = 7000

One half of personal debts, 4800 = 2400

One half of credit card loans, 3500 = 1750

Funeral expenses = 7000

Thus

Total insurance needed =

70000 + 7000 +2400 + 1750 + 7000

= $88,150

Note that, when using DINK method, what the spouse earn isn't used in calculating total insurance.

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