Final answer:
The factors to consider in the needs approach of determining life insurance amount include family expenses, wage earner's value, surviving spouse's income, and number of dependents.
Step-by-step explanation:
When utilizing the needs approach in the determination of the amount of life insurance, the following factors should be considered:
- The family expense that will remain after the wage earner dies: This refers to the financial obligations or expenses that the family will have to continue paying even after the wage earner's death. For example, mortgage payments, monthly bills, and educational expenses.
- The value of the wage earner's life in the event he or she dies: This refers to the financial contributions and support provided by the wage earner to the family. It includes the income earned, potential future earnings, and any other financial benefits the wage earner provides.
- The income that can be generated by the surviving spouse: This refers to the potential income that the surviving spouse can generate to support the family in case of the wage earner's death. It may include their own earnings, investments, or other sources of income.
- The number of dependents: This refers to the number of people who are financially dependent on the wage earner. The more dependents there are, the higher the financial needs and the amount of life insurance required.