Those who have someone depending on their income should invest in life insurance to help their dependents cover expenses should something happen to them. However, it isn’t always easy to figure out just how much Life Insurance in Rancho Cucamonga CA is needed. There are a few different methods commonly used to calculate these numbers.
The Simple Method
One easy method to use that isn’t necessarily all that accurate is to multiply income by a number between seven and ten to determine how much Life Insurance in Rancho Cucamonga CA to get. The problem is this method doesn’t account for all the variables, such as the number of children a couple has, how much debt they have, the ages of the dependents, and funeral and college expenses.
Expected Expenses Minus Expected Income
Another method to determine life insurance needs is to take the amount of money necessary to pay off any debts plus that needed by the dependents and then subtract whatever income they’ll have after you’re gone. The resulting amount is the amount of life insurance to get. Keep in mind that over time the expected income will change, especially as people reach retirement age and become eligible for social security and pensions as well as any retirement savings.
Investment Potential
Some people want to leave a large enough amount of life insurance that the interest will be enough to cover the needs of the family each year. This can be a good idea if there’s a disabled child, for example, who will need looking after for the rest of their life rather than just through the college years.
Factors to Consider
Getting term life insurance is less expensive when you’re younger and gets more expensive with age. Be sure to take into account funeral expenses, which average about $7,000, as well as potential college expenses for kids and any existing debt, including mortgages, student loans, and car loans. The younger any children are, the more years of income replacement will be necessary to cover the cost of raising them through college when they become independent.
Contact Barranca Insurance Services Inc. for more information. They sell life, auto, home, and health insurance as well as commercial insurance.
