The most preferred technique for determining how much life insurance coverage is needed for an individual is:
A)computing the Human Life Value.
B)using 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)assessing the family's total economic needs and subtracting the financial resources available to meet those needs.
D)estimating 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)using the multiple-of-earnings method adjusted for occupation.

Question

Quizplus · Accepted Answer

The most preferred technique for determining how much life insurance coverage is needed for an individual is assessing the family's total economic needs and subtracting the financial resources available to meet those needs. This method takes into account the unique financial situation and needs of the individual's family and ensures that their needs are adequately covered in the event of the individual's death. Other methods, such as the Human Life Value or the multiple-of-earnings method, may not accurately reflect the individual's specific financial situation and may result in either over or under-insuring.

The Most Preferred Technique for Determining How Much Life Insurance