Based on the annual income, the estimated life insurance recommended based on easy method would be $245,000 which means that option (2) would be the right answer.
The easy method is a technique of calculating estimated insurance which can determine the life insurance requirement. The two major types of life insurance are term life insurance and permanent life insurance. Life insurance policies aim at providing protection to person's life or other commodities which can be used by them in case of mishap or at the age when they will not be able to earn well. It is calculated as the product of 70 percent of gross salary and 7. The mathematical calculation to determine life insurance based on easy method is given by the formula:
Life insurance needed = 0.70 × Salary amount × 7
Life insurance needed = 0.70 × $50,000 × 7 = $245,000
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