American_Bankers_Association
CTFA · Question #324
According to multiple of earnings method, the rule of thumb used by many insurance agents is that your insurance coverage should be equal to 5 to 10 times your current income. For example, if you…
The correct answer is D. $350,000 and $700,000 life insurance. See the full explanation below for the reasoning.
Estate Planning
Question
According to multiple of earnings method, the rule of thumb used by many insurance agents is that your insurance coverage should be equal to 5 to 10 times your current income. For example, if you currently earn $70,000 a year, using the multiple of earning method then you need between:
Options
- A$300,000 and $700,000 life insurance
- B$400,000 and $700,000 life insurance
- C$390,000 and $800,000 life insurance
- D$350,000 and $700,000 life insurance
How the community answered
(66 responses)- A5% (3)
- B11% (7)
- C3% (2)
- D82% (54)
Topics
#multiple of earnings method#life insurance calculation#income multiplier#coverage amount
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