What does the needs approach in life insurance aim to determine?

The needs approach in life insurance is designed to identify and assess the specific financial requirements of a client in the event of their death. This method focuses on evaluating the individual’s current and future obligations, such as income replacement, debts, ongoing living expenses, education costs for dependents, and other financial responsibilities. By determining the client's actual needs, the approach ensures that the life insurance policy purchased provides adequate coverage to meet those needs, helping to secure the financial stability of beneficiaries.

This ensures that the life insurance coverage is tailored to the unique situation of the client, rather than being a generic solution. It takes into account factors such as family size, lifestyle, and long-term goals, making it a personalized strategy to safeguard financial interests. This is why the focus on the client's actual needs is pivotal in guiding them to select the appropriate amount and type of life insurance coverage.