Theresa Cortez is the primary breadwinner for a family of four. Her husband has been unable to work since the onset of severe vertigo 2½ years ago. Their two children are both in high school and, presumably, college bound. After attending your seminar about life insurance planning, she has come to you to determine whether she has enough life insurance. Besides the small disability check that her husband receives, she is the only source of income—albeit a good income of $84,000 per year. At your request, she has brought her most recent annual income and expense statement that shows the family’s annual expenses of $55,000, annual taxes of $17,000, and savings of $12,000.

Calculate Theresa’s current insurance need using the Human Life Value approach for each of the following four scenarios, assuming her remaining working life is 26 years and the projected discount rate is 8.0% before taxes, compounded daily.
a. Using her gross income.
b. Using her gross income and a growth rate of 3.5%.
c. Using her net income.
d. Using her net income and a growth rate of 3.5%.

Which of these four methods would result in the most reasonable estimation of insurance need?