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breadwinner was alive. The readjustment period income provides a cushion period for the spouse to adapt to their new situation.

Children's income needs during their dependency period - when the insured's children are under 18 at the time of that person's death, the family should receive income during the ‘dependency period’, i.e. the period between the breadwinner's death until the children reach age 18. The income needed may vary from family to family depending on whether the spouse is on the labor force or plans to remain at home to look after the children.

The surviving spouse's income needs - for a spouse who is under age 60, who has been unemployed for years and whose youngest child has reached 16, the need for income in the case of the family head's death is particularly urgent. This is especially true if the insured dies during the ‘blackout period’ (the period from the time ‘Social Security survivor benefits’ terminate to the time they are resumed).

The spouse's retirement needs - the need for the surviving spouse's adequate retirement should be considered.

Special Needs

Any additional family needs that are not covered by any of the above categories. Different funds can be established to cater for these needs, including an education fund, an emergency fund, a mortgage-repayment policy, and other major-debt-repayment policies (for cars or other non-mortgage long-term debt).

Steps for Calculating Needs Approach

Adjust your salary downward - Decreasing your salary takes into account the fact that family expenses will decline with the loss of an adult family member.

Add up all funding needs - This inventory of funding needs is a very detailed description of the total needs of the family. The total needs of the beneficiaries include the following: immediate needs, such as needs for a funeral and other expenses; debt elimination needs, such as needs to pay off debts like credit cards and mortgages; transitional needs, which include helping the spouse gain needed skills for better employment if necessary; dependency needs, such as needs for taking care of and educating children and sending them on missions; spousal life income needs, such as needs to take care of the spouse so he or she does not have to work; and education and retirement needs, such as the need to take care of the surviving spouse in retirement.

3. Subtract current insurance coverage and other available assets - The result gives you the amount of additional coverage you will need.

4. Determine the income stream replacement that would be needed to meet the family needs and then calculate the amount of money required to provide the needed annuity - The difference between your total needs and your current coverage and available assets determines the amount of additional insurance coverage that will be necessary to meet the needs of dependents in the event that the breadwinner dies. While it is not necessarily desirable, some couples find it essential to have two breadwinners. In that case, couples should consider having life insurance for both spouses.

If your goal for having life insurance is income replacement, recognize that your income needs will change over time. Depending on your salary, the size of your family, your investment plan, and