Final answer:
The approach needed to calculate the immediate financial needs for a family upon the death of the insured is a Needs Analysis, taking into account death-related expenses and living costs for the dependents.
Step-by-step explanation:
The approach that calculates the amount of money a family needs immediately upon the death of the insured to pay for their expenses and basic necessities is called Needs Analysis. This analysis considers various factors such as funeral costs, outstanding debts, living expenses, and education costs for dependents. Cash-value (whole) life insurance can be a component in planning for these needs, as it includes a death benefit and accumulates a cash value that can be used by the family.
Economists also contribute to the understanding of the value of human life by evaluating the risks people take in occupations and the premiums they are paid for doing so. However, this method focuses on the economic impact of a person's life rather than the immediate financial needs of their dependents upon death.
Ultimately, insurance is designed so that the average person's payments cover claims, administrative costs, and contribute to the insurance company's profits, underpinning the importance of calculating an accurate insurance coverage amount through Needs Analysis.