What does the human life approach focus on in life insurance?

The human life approach focuses on determining the economic value of an individual's life, specifically considering the financial impact that their death would have on their dependents or beneficiaries. It assesses the value of future earnings, expenses, and liabilities, aiming to ensure that loved ones can maintain their standard of living after the policyholder's death. This method emphasizes the quantification of human life in monetary terms and is centered around providing a death benefit that reflects the income potential of the insured, allowing beneficiaries to cover ongoing expenses and maintain their financial stability.

In contrast, maximizing the death benefit prioritizes the highest possible payout without necessarily considering the insured's financial situation or the needs of their beneficiaries. Investing the premiums wisely would relate to the management of funds rather than focusing directly on life insurance needs. Reducing the duration of the policy does not align with the core principle of ensuring financial security for dependents, as it may undermine the protection intended for the insured's loved ones.