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

Question

Quizplus · Accepted Answer

The multiple-of-earnings approach assumes that a person's life insurance needs are directly proportional to their income, but it fails to take into account other factors such as debts, dependents, and future expenses. As a result, it may not accurately reflect an individual's actual life insurance needs, making it unreliable as a sole method of evaluation.

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