Life Insurance Needs Analysis
Systematic determination of appropriate coverage using DIME (Debt + Income + Mortgage + Education), Human Life Value, or Capital Needs Analysis.
Exam Tip
Know DIME method. HLV: younger = higher value. Capital needs = most sophisticated. Subtract existing resources and Social Security.
Methods
DIME Method
- D: Debt + final expenses
- I: Income × years needed
- M: Mortgage balance
- E: Education costs
Human Life Value (HLV)
Present value of future earnings.
- Younger = higher HLV
- Higher income = higher HLV
Capital Needs (Most Sophisticated)
Identifies specific survivor needs, then subtracts existing resources.
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Term Life Insurance
Term life insurance provides death benefit protection for a specific period (term), with no cash value accumulation, offering the lowest premium for the highest coverage.
Whole Life Insurance
Whole life insurance is a permanent life insurance policy that provides lifetime coverage with fixed premiums, a guaranteed death benefit, and cash value that grows at a guaranteed rate.
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