The needs approach is a popular strategy for helping individuals decide how much life insurance is necessary for them and their family. This approach is based on the concept that life insurance should be purchased to cover the individual’s debts and any financial obligations the family may have when they pass away.

When using the needs approach, an individual considers the expenses they must pay while they are still alive (such as a mortgage or loan repayment) along with the expenses the family will have when they are gone (such as funeral or burial costs). This requires the individual to calculate how much money their family will need to cover their living expenses for the foreseeable future.

The calculations for a needs-based approach can be complex and involve taking financial factors such as inflation and taxes into account. It is advised that individuals consult a qualified financial advisor or insurance broker so they can create an accurate needs assessment and get an adequate amount of coverage.

The needs approach is especially useful for those who have dependents since they will have to consider childcare costs and education expenses of the surviving family members. An accurate assessment of the needs of a family at this time can help provide the family with the resources they need to continue life.

For those with no dependents, the needs approach can focus on their legacy plan, including their funerals and burial, as well as their final tax, estate, or charitable donations.

In conclusion, the needs approach to life insurance planning is an effective way to determine an individual's desired amount of coverage. By taking into account factors such as debts, taxes, and family obligations, an individual or family can assess their financial future and make an informed decision about their insurance needs.