What does the Needs Approach to life insurance focus on?

The Needs Approach to life insurance primarily focuses on assessing and covering financial shortages that a family or dependents may experience if the primary breadwinner passes away. This approach takes into account the financial obligations and future needs of the insured's dependents, such as living expenses, mortgage payments, education costs for children, and other necessary expenses. By evaluating these needs, the correct option emphasizes the importance of quantifying the amount of life insurance coverage required to ensure that dependents continue to have financial stability in the absence of the insured's income.

In contrast, calculating premiums based solely on age does not assess individual financial needs or obligations. Providing temporary coverage only limits the strategy to short-term solutions rather than a comprehensive long-term financial plan. Determining personal savings requirements does not directly address how life insurance can protect against economic hardship caused by the loss of income, which is the central focus of the Needs Approach.