The needs approach is a way of determining the appropriate amount of insurance based on specific expenses a client may want to cover. Potential expenses could include items such as funeral expenses, estate settlement costs, and replacement of a portion of future income to sustain the spouse or dependants.
The needs approach is a function of two variables:
1: The amount that will be needed at death to meet immediate obligations.
2: The future income that will be needed to sustain the household.
Lump sum requirements
The immediate lump sum requirements are set via the Needs – Lump sum form:
PrimeSolve tracks actuarial data on the upfront medical cost of Total & Permanent Disablement. Advisers have the ability to specify an additional medical cost or leverage of the available assumptions provided as per the below:
| Level of care | Cost |
|---|---|
| High care | $380,000 |
| Medium high care | $180,000 |
| Medium care | $125,000 |
| Medium budget care | $85,000 |
| Budget care | $58,000 |
| Specify other amount | 0 |
Income requirements
A user is able to set multiple income requirements. To create a new income requirement select “Add another”.
Note: An income objective objective can relate to multiple models. For example, a Life Needs model may be created for Client A & Client B. It is possible to link the same objective to both models.
An example of how the needs method is calculated is provided below:
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