What analysis is performed to determine how much insurance a client needs to meet future financial goals?

Determining how much insurance a client needs to meet future financial goals is effectively carried out through a capital needs analysis. This analysis focuses on identifying the specific financial requirements a client will have at various points in the future, taking into account factors such as income needs, outstanding debts, education expenses, and other financial commitments.

A capital needs analysis helps to assess the gap between the client’s current financial resources (such as savings and existing insurance) and the projected costs required to ensure financial security for the client and their beneficiaries. By establishing these future needs, the analysis allows for a tailored recommendation on the amount of insurance necessary to fill any identified gaps and support the client’s financial objectives.

While other analysis types, like risk assessment, investment strategy, and coverage gap analyses, play important roles in a comprehensive financial plan, they do not specifically address the quantifiable financial needs that must be considered for adequate insurance coverage tied to future goals. The capital needs analysis directly aligns with tracking those financial requirements, making it the appropriate choice in this scenario.