What Is Needs Analysis? Definition

Why it matters

The agent asks about funeral costs, mortgage, other debts, family income, and savings, then works out the gap. Doing this first prevents selling the wrong amount. A written analysis helps the family trust the number. Results change over time, so repeat it after big life events. Agents should keep notes.

Source: iii.org

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Related terms

DIME Method (DIME): The DIME method is a simple way to estimate coverage by adding Debt, Income, Mortgage, and Education costs. The total is a starting point for the coverage amount.
Income Replacement: Income replacement is the goal of buying life insurance to replace the earnings a family would lose if the insured died. It is often a multiple of annual income.
Coverage Amount: The coverage amount is the total death benefit you choose to buy. It should reflect your debts, your family's income needs, and final costs such as the funeral.
Human Life Value: Human life value is an estimate of the worth of a person's future earnings to their family, used to size life insurance. It is based on income, years left to work, and discount rates.
Needs-Based Selling: Needs-based selling is a sales approach that starts by learning the family's goals, budget, and risks, then matches a product to those needs. The product is chosen after the questions, not before.

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Where we use this term

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