Question

If a famlies total living expenses are 63,000 a year. After the death of the insured, the total family income would be 55,000. How much life insurance is required to cover the dependents icome shortfall, if prevailing interest rate 4%. I am not sure that the answer I came up with is right. Looks to me I may have not calulated it correct.

My answer 157,500

Answer 1

I get $200,000. At 4% interest, the income of $8000 will make up for the lost income.