A person earning $75 000 per year has term life insurance at his or her place of employment equal to his or her annual income. Using the income method with a factor of 5, how much additional life insurance will he or she need?

Question

Quizplus · Accepted Answer

To calculate the additional life insurance needed, we use the income method, which is multiplying the annual income by a factor. The factor used is 5 in this case.

Thus, the additional life insurance needed would be:

Additional life insurance = (Factor x Annual income) - Existing life insurance
Additional life insurance = (5 x $75,000) - $75,000
Additional life insurance = $375,000 - $75,000
Additional life insurance = $300,000

Therefore, the person will need an additional $300,000 of life insurance coverage.

Option B is the correct answer.

A Person Earning $75 000 Per Year Has Term Life