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:
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A. B. C. D.D
The multiple of earnings method is a rule of thumb used by many insurance agents to determine how much life insurance coverage an individual should have based on their current income. According to this method, an individual's life insurance coverage should be equal to 5 to 10 times their current income.
Using this method, if an individual earns $70,000 a year, they would need between $350,000 and $700,000 in life insurance coverage. This is calculated by multiplying their current income by the multiple of earnings factor of 5 to 10.
So, the correct answer would be D, which is between $350,000 and $700,000 life insurance coverage.
It's important to note that this is a rule of thumb and may not be sufficient for everyone's individual needs. Other factors, such as debt, dependents, and future financial goals, should also be considered when determining life insurance coverage. It's recommended that individuals consult with a financial advisor or insurance agent to determine their specific life insurance needs.