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Financial advisory
RES5Financial Advisory Services✓Using the needs approach, a client's family requirements on her death are: income replacement S$450,000, outstanding mortgage S$180,000, children's education S$120,000 and final expenses S$25,000. Against these she has savings and investments of S$100,000 and existing life cover of S$300,000. What additional sum assured (protection gap) is needed?
Total needs = 450,000 + 180,000 + 120,000 + 25,000 = S$775,000. Existing resources = 100,000 (savings/investments) + 300,000 (existing cover) = S$400,000. Protection gap = 775,000 − 400,000 = S$375,000.
S$775,000 is total needs before netting off existing resources; the needs approach deducts current savings and cover to find the gap.
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