In the Needs Approach, what must be determined to calculate the life insurance need?

• A. The family's financial objectives if the income earner dies or becomes disabled
• B. The policy's cash value growth
• C. The insurer's underwriting guidelines
• D. The premium payment schedule

Answer: (A)

In the Needs Approach, you determine the family's financial objectives if the breadwinner dies or becomes disabled. This means estimating how much money the family will need to maintain living expenses, pay off debts, fund education, cover final expenses, and replace income for a period of time. Once these needs are quantified, you can compare them to any existing resources (savings, current life insurance, etc.) to find the additional coverage required. The other factors listed—cash value growth, underwriting guidelines, and premium payment schedule—don’t set how much protection is needed; they relate to policy features or the insurer’s process rather than the family's financial needs.