Life Insurance Needs: Family Needs Approach
The family needs approach--also called the needs approach, the total needs approach, or needs analysis--is a method of determining the amount of life insurance you should carry. It assumes that the goal of life insurance is to cover the surviving family members' immediate expenses after the insured family member's death as well as their ongoing expenses into the future. In contrast to the income replacement approach, it focuses on the financial needs of surviving family members rather than the expected earnings of the insured. It involves determining the dollar amount necessary to allow your family to meet its various expenses in the event that the insured family member should die.