The Preferred Technique for Determining How Much Life Insurance Coverage

question 84

Multiple Choice

The preferred technique for determining how much life insurance coverage is needed for an individual is to:

• A) compute the human life value.
• B) use the probability of death each year, prevailing interest rates, and assumed inflation rates to find the discounted present value of a future income stream.
• C) assess the family's total economic needs and subtracting the financial resources that would be available after death to meet those needs.
• D) estimate the sum of money which, when paid in installments, will produce the same income as the person would have earned after deducting assumed amounts for taxes and personal maintenance expenses.
• E) use the multiple-of-earnings method adjusted for occupation.

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Definitions:

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Teratogenic

Pertaining to or capable of causing birth defects or developmental abnormalities in an embryo or fetus.

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A stimulant found in coffee, tea, and other beverages, known to enhance alertness and energy levels.

Coffee

A brewed drink prepared from roasted coffee beans, which are the seeds of berries from the Coffea plant.