Financial Needs Analysis

A financial needs analysis (FNA) is a detailed assessment used by financial advisors and insurance professionals to evaluate an individual’s or family’s current financial situation and determine the level of protection or investment required to meet their goals. It examines income, expenses, debts, assets, savings, and existing insurance coverage to identify gaps and recommend suitable financial strategies.

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In insurance planning, a financial needs analysis helps determine how much life, disability, or critical illness insurance is necessary to maintain a family’s lifestyle and cover financial obligations if the primary earner becomes ill, disabled, or passes away. It can also include planning for retirement, education funding, or estate protection. The analysis provides a personalized roadmap to align financial products with long-term objectives, risk tolerance, and budget.

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Example:

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If you have a mortgage of $400,000, annual family expenses of $60,000, and existing life insurance of $150,000, a financial needs analysis would show that you may need an additional $400,000 in life insurance coverage to ensure your family’s financial security.

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What to Watch For:

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Ensure your financial needs analysis is based on current and accurate information. Revisit it regularly or after major life changes such as marriage, home purchase, or business growth. Be wary of one-size-fits-all recommendations - a proper analysis should be comprehensive and tailored to your personal goals, not just focused on product sales.