Massachusetts Life Producer Practice Exam

Which of these factors does NOT influence an individual's need for life insurance?

1. Family structure

2. Annual income

3. Self-maintenance expenses

4. Outstanding debts

The correct answer is: Self-maintenance expenses

The correct answer highlights that self-maintenance expenses do not directly influence an individual's need for life insurance in the same way that other factors do. Life insurance is fundamentally about providing financial security for dependents and beneficiaries in the event of the policyholder's death. Various factors that impact this need include family structure, which determines how many dependents rely on the policyholder; annual income, which relates to the financial support needed for the family; and outstanding debts, which often need to be settled to prevent financial burdens on survivors. Self-maintenance expenses, while important for an individual's overall financial planning and budgeting, are usually considered personal financial obligations that do not directly relate to the need for life insurance. Therefore, they do not affect the assessment of how much life insurance someone should have, which is primarily calculated based on the potential future financial needs of dependents, obligations that need settling, and the individual's overall income and lifestyle considerations.