What determines how much benefit would be necessary to replace lost income and increased expense in case of premature death?

The needs approach is essential in determining the necessary benefit amount to replace lost income and cover increased expenses resulting from premature death. This method takes into account the specific financial needs of the insured's dependents. It assesses ongoing living expenses, debt obligations, children’s education costs, and any other financial goals that may require funding after the death of the insured.

By focusing on the individual circumstances of the family or dependents, the needs approach ensures that the resulting life insurance coverage is tailored to fully address potential financial gaps. This personalized assessment contrasts sharply with more generic valuation methods, emphasizing the variety of individual needs that could arise from an untimely loss of income.

In comparison, while the human life value approach provides a broader economic perspective based on an individual's potential future earnings, it does not directly address the immediate financial needs of dependents in the event of the insured's death. Viatical settlements, on the other hand, pertain to selling a life insurance policy by someone with a terminal illness, and insurance underwriting primarily focuses on assessing risk and approving coverage rather than determining benefit amounts in relation to loss of income and expenses.