While using the needs analysis approach to determine how much life insurance to purchase, you should:
A) add the financial resources that will be available after your death to your family's total economic needs.
B) multiply your gross annual earnings by the size of your family.
C) purchase the equivalent of your current annual income.
D) divide your gross annual earnings by the size of your family.
E) deduct the financial resources that will be available after your death from your family's total economic needs.

Question

Quizplus · Accepted Answer

The needs analysis approach involves assessing your family's total economic needs, such as outstanding debts, future expenses like education costs and retirement, and living expenses. It then subtracts any financial resources that will be available after your death, such as savings, investments, and existing life insurance policies. The resulting amount is the recommended amount of life insurance coverage needed to ensure your family is financially protected in case of your death. Therefore, deducting the financial resources that will be available after your death from your family's total economic needs is the best choice.

While Using the Needs Analysis Approach to Determine How Much