The needs approach in life insurance is primarily used to determine what?

The needs approach in life insurance focuses on assessing the financial requirements of a client’s beneficiaries in the event of the client's death. This approach helps determine the amount of life insurance coverage necessary to meet those needs adequately. It takes into account various factors, such as outstanding debts, ongoing living expenses, education costs for children, and future financial goals that need to be maintained after the policyholder's passing.

By evaluating these specific needs, an insurance advisor can provide a well-rounded solution that ensures the client leaves behind sufficient financial support for their loved ones. This approach is crucial because it tailors the insurance coverage to the actual financial requirements, rather than adhering to generalizations or assumptions.

The other options, while relevant to the overall insurance planning process, do not encapsulate the primary focus of the needs approach. For instance, determining the type of policy or its duration might play a role in the overall decision-making process, but the core function of the needs approach centers on quantifying the amount of life insurance necessary to provide financial security for the insured’s beneficiaries. Similarly, the investment strategy for the premiums involves a separate evaluation of how the policyholder’s contributions can be utilized, which is not the main intent of the needs approach.