Question

What is the needs analysis method of arriving at the insurance cover amount?

a.

It is a method that quantifies the estimated potential earnings of the insured.

b.

It is a method that takes into account the future financial needs of the beneficiaries and translates this into the death benefit amount.

c.

It is a method that assesses the value of the insured's assets and liabilities.

d.

It is a method that evaluates the risk factors associated with insuring the life of the insured.

Posted under IC22 Life Insurance Underwriting

Answer: (b).It is a method that takes into account the future financial needs of the beneficiaries and translates this into the death benefit amount. Explanation:The needs analysis method attempts to arrive at the insurance cover amount by taking into account the future financial needs of the beneficiaries and then translating this into the death benefit amount. This method is generally based on factors such as providing benefit in the period immediately following the death of the insured to offset additional expenses, supporting the normal living expenses of the dependents, providing long term income for the retired surviving spouse, and taking into account the financial liabilities and financial responsibilities of the individual.

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Q. What is the needs analysis method of arriving at the insurance cover amount?
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