easy · Certified Financial Planner Risk Management
The Parnell household is evaluating life insurance needs for Mark, the primary earner. A previous analysis calculated Mark's Human Life Value as $2,440,000. However, the planner insists on performing a 'Needs Approach' analysis instead.
Which of the following best describes the core objective of the Needs Approach for the Parnells?
- Estimating the total estate tax liability under the assumption that the 2025 Act provisions will sunset and the exclusion will return to $7,000,000.
- Summing specific cash requirements such as debt retirement, education funding, and survivor income needs, then subtracting existing resources.
- Capitalizing Mark's future net economic contribution to the family over his remaining work-life expectancy.
- Calculating the total premiums required to sustain a level term policy until the youngest child reaches age 26.
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