The most valuable single technique in personal risk management to assist an indi

Question

The most valuable single technique in personal risk management to assist an individual in determining how much life insurance is needed is:
a. Computing the Human Life Value.
b. Using the probability of death each year, prevailing interest rates and assumed inflation rates to find the discounted present value of a future income stream.
c. Assessing the family's total economic needs and subtracting financial resources available to meet those needs.
d. Estimating the sum of money which, when paid in installments, will produce the same income as the person would have earned, after deducting assumed amounts for taxes and personal maintenance expenses.
e. Using a multiple of earnings adjusted for occupation.

Explanation / Answer

b. Using the probability of death each year, prevailing interest rates and assumed inflation rates to find the discounted present value of a future income stream.

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