Which approach is most commonly used to determine a person's life insurance needs?

The needs approach is the most commonly used method for determining a person's life insurance needs because it focuses on the specific financial requirements of an individual or their family after the person's death. This method assesses the future financial obligations and immediate expenses that need to be covered, ensuring that dependents will not face financial hardship.

The needs approach considers factors such as outstanding debts, living expenses, education costs for children, and any other financial goals the individual wishes to ensure are met. By analyzing these needs, it provides a tailored approach that helps in accurately calculating the amount of life insurance necessary to cover these financial responsibilities.

This strategy contrasts with other methods, which may not provide the same level of personalized assessment. For example, the human life value approach estimates a person's value based on their potential earnings, while the investment approach focuses on how life insurance could serve as a financial investment rather than purely as a protective measure. The market value approach is less common as it doesn't address individual needs directly and often does not take into account future obligations or financial goals.