Definition of "Needs approach"

Deonne Ramos real estate agent

Written by

Deonne Ramoselite badge icon

Keller Williams Realty

Personal insurance method used to analyze the amount necessary to maintain a family in its customary life-style, should the primary wage earner die. This includes such considerations as:

  1. immediate needs ("cleanup fund") expenses associated with final medical treatments and burial, inheritance taxes, estate taxes, probate costs, outstanding debt.
  2. continued income while children are still in school and depend on family support.
  3. continued income for the surviving spouse after children no longer depend on family support.
  4. continued income to pay a mortgage, education expenses, emergency expenses, and miscellaneous expenses.
  5. retirement fund for the surviving spouse.
From the sum of these expenses, subtract sources of income available to the surviving spouse (Social Security, investments, employee benefit plans such as group life insurance and pensions), to arrive at a final figure on which to base the amount of life insurance the wage earner should consider.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Insurance Terms

Pre-determined dollar amount up to which an insurance policy will cover an insured each year, regardless of the number of claims submitted or defense costs associated with these claims. For ...

In some states, principle of tort law providing that in the event of an accident each party's negligence is based on that party's contribution to the accident. For example, if in an auto ...

Computation of the asset share value, surrender value, and reserve and the comparison of the three computations in order to judge the adequacy and equity of the tentative gross premium ...

Property insurance closely associated with fire insurance and usually purchased in conjunction with a Standard Fire Policy. Allied lines include data processing insurance, demolition ...

Single life insurance policy combining term life insurance and ordinary life insurance. If the insured dies during the term period, a multiple of the face amount is paid to the beneficiary. ...

One of four types of risks affecting the life insurance company as identified by the society of actuaries. This risk is associated with losses that the life insurance company may incur as ...

Same as term Ceding Company: insurance company that transfers a risk to a reinsurance company. ...

Gain when the underlying asset that moves in one direction is significantly different from the loss when the underlying asset moves in the opposite direction; for example, when gains and ...

Policy in which a premium (the deposit) is paid in the first policy year, in addition to the regular term insurance premiums required. The deposit is left to accumulate at interest for a ...

Popular Insurance Questions