Natasha is 38 years old and married with two children. She earns $60,000 a year gross, and nets $46,000 after taxes. She anticipates working for 25 more years, and wants to assume a 5% rate of return. What is her life insurance need if she wants to use the income multiplier approach, and as her financial planner you use a multiplier of 15?
A: $690,000
B: $1,200,000
C: $900,000
D: $720,000
As per the income Multiplier Approach, Multiply the annual Income by Replacement Multiplier
Income Replacement Multiplier changes with age. So between the ages of 20-30 years, the income multiplier is 5-10, and from 30 to 40, the income multiplier is 15-20.
Net annual Income= $46000
Multiplier=15
Life Insurance needed=$ 46000*15=$690,000.(A)
Natasha is 38 years old and married with two children. She earns $60,000 a year gross,...
Natasha is 38 years old and married with two children. She earns $60,000 a year gross, and nets $46,000 after taxes. She anticipates working for 25 more years, and wants to assume a 5% rate of return. What is her life insurance need if she wants to use the income multiplier approach, and as her financial planner you use a multiplier of 15?
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