Needs Approach

Deonne Ramos 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.