Which of the following is true of the multiple-of-earnings method?
A)The multiple-of-earnings method determines the amount of life insurance coverage needed by multiplying the net annual earnings of the insured by some selected number.
B)The multiple-of-earnings method determines the amount of life insurance coverage needed by multiplying the gross annual earnings of the insured by some selected number.
C)The multiple-of-earnings method considers the insured's financial obligations to compute the insurance premium amount.
D)The multiple-of-earnings method divides the gross annual earnings of the insured by the insurance coverage available to the insured to determine the amount of annual insurance premium.
E)The multiple-of-earnings method determines the amount of tax benefits available to the insured when the life insurance coverage is availed.

Question

Quizplus · Accepted Answer

The multiple-of-earnings method calculates life insurance coverage by multiplying the insured's gross annual earnings by a selected number, typically reflecting the number of years the income needs to be replaced.

Which of the Following Is True of the Multiple-Of-Earnings Method