South Carolina Life and Health Practice Exam

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What is the focus of the Needs Approach in life insurance planning?

  1. The cost of living index

  2. The income earner's investment strategies

  3. The family's complete financial objectives

  4. The dependent's educational funds only

The correct answer is: The family's complete financial objectives

The focus of the Needs Approach in life insurance planning is on the family's complete financial objectives. This approach emphasizes understanding the various financial needs that arise when a family loses an income earner. It involves a comprehensive assessment that includes factors like outstanding debts, ongoing living expenses, future needs such as children's education, and other long-term financial goals. By concentrating on the entire scope of the family's financial situation, the Needs Approach ensures that sufficient coverage is determined to meet those diverse needs, thereby providing financial security and stability for the surviving members after a loss. This holistic view is essential in crafting an effective life insurance plan, as it safeguards against not just immediate expenses but also future financial obligations and aspirations.

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