Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
The Needs approach to determining how much life insurance a client should buy focuses on:
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
The Needs approach adds up the family's specific financial needs after death — final expenses, mortgage payoff, education funds, and ongoing income needs — and purchases enough coverage to meet them. The Human Life Value approach, by contrast, capitalizes the insured's future earnings over a working lifetime. Needs is expense-driven; Human Life Value is income-driven.
Why the other options are wrong
- A) Capitalizing future earnings describes the Human Life Value approach, not the Needs approach.
- C) Retirement assets are not the focus; the Needs approach targets post-death obligations, not the insured's savings.
- D) Employer group coverage is a source of existing coverage to subtract, not the method itself.
Memory hook
Needs = what the family must pay (bills). Human Life Value = what the breadwinner would earn (income). One looks at the ledger, the other at the paycheck.