Which of the following is considered useful information when calculating the amount of life insurance needed for an income earner?

• A. The income earner's current and future expected earnings
• B. The income earner's favorite vacation destination
• C. The color of the income earner's car
• D. The number of pets owned by the income earner

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the context of the question. The problem is asking about factors relevant to calculating the amount of life insurance needed for an income earner. Life insurance is typically calculated based on financial needs and obligations, not personal preferences or unrelated details.
2. Step 2: Identify the key financial factors that influence life insurance calculations. These include the income earner's current earnings, future expected earnings, outstanding debts, living expenses, and financial goals for dependents.
3. Step 3: Eliminate irrelevant information. The income earner's favorite vacation destination, the color of their car, and the number of pets owned are not financial factors and do not contribute to the calculation of life insurance needs.
4. Step 4: Focus on the relevant information. The income earner's current and future expected earnings are critical because they determine the financial support that would need to be replaced in the event of their passing.
5. Step 5: Conclude that the correct answer is the income earner's current and future expected earnings, as this information directly impacts the calculation of life insurance needs.