Life Insurance Basics & Policies

The present value of an insured's future earnings that would be lost to the family if the insured died, used to set a coverage amount.

The amount of insurance required to cover the family's specific financial needs and obligations after the insured's death, such as final expenses, debts, income, and education.

Human life value bases coverage on lost future earnings; the needs approach bases it on the family's actual financial obligations and goals.

Providing money to replace the earnings a deceased breadwinner would have contributed, so survivors can maintain their standard of living.

Costs incurred at death such as funeral, burial, medical bills, and estate settlement charges that the death benefit can cover.

It creates immediate liquidity to pay estate taxes and settlement costs and to equalize inheritances, preventing forced sale of estate assets.