Life · Chapter 10 · Amount of Coverage
Needs Approach
Definition
Determines coverage from the survivors' goals and obligations: total capital needs (final expenses, debts, mortgage, education, emergency fund, bequests, spouse's income) minus liquid assets = insurance needed. Accounts for Social Security and the blackout period.
In plain English
Add up everything the family would need if you died tonight, subtract what they'd already have — the gap is the policy.
Exam tip
Needs = survivor-focused and goal-focused. HLV = income-focused. A question mentioning funeral costs, mortgages, or college funds is describing the NEEDS approach.
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
Related terms