The Multiple-Of-Earnings Approach to Evaluate Life Insurance Needs Is Simplistic

question 83

True/False

The multiple-of-earnings approach to evaluate life insurance needs is simplistic but can be unreliable.

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Definitions:

Economic Lives

The duration over which an asset is expected to be useful in generating revenue or other economic benefits.

Equivalent Annual Cost

The cost per year of owning and operating an asset over its entire lifespan, taking into account both the initial purchase price and the ongoing operating costs.

NPV

A calculation technique used to estimate the value of an investment by assessing the present value of all cash flows associated with it, both incoming and outgoing.

Burnout Brand

A term referring to a brand that has lost its appeal or distinctiveness in the market, often due to overexposure, lack of innovation, or failure to maintain consumer interest.