Protection Need - Life Insurance - RightCapital Help Center

The Protection Need is a variable specific to the Life Insurance Analysis in RightCapital. The Life Insurance Analysis can be found within the Insurance > Life Insurance tab of each client plan:

Important Note: Joint vs. Single

The Life insurance analysis will work differently depending on whether the plan is joint, or for a single client. Below you'll find protection need definitions for both joint and single life insurance analyses.

Joint Plan

Within joint plans, the Life Insurance Analysis will run a set of side-by-side projections: one for the client, and another for the co-client. Each projection is simulating a very specific what-if scenario:

"If the client / co-client passes away next year, will the surviving client run out of money before the end of their plan?"

Each projection considers the surviving client's remaining income and investments to determine whether or not they can make it to the end of their planning horizon without running out of assets. If either client runs out of money in their projection, a Protection Need will be calculated and displayed- this value represents the amount of insurance that would ensure the surviving client would not run out of money:

You can use the Action Items at the bottom of the page to adjust income, expenses, goals, and more for each projection. The changes that you make within the Action Items will directly impact the protection need being calculated for each client.

The projections used to calculate the protection need include all of the same plan variables as the Retirement Analysis, with the following adjustments:

Any income, savings, expenses, or goals associated with the deceased are removed from the surviving client's projections.
Any existing insurance that would be paid out is included. The death benefit received will be assumed to be invested with the same proposed asset allocation as their other invested assets.
Living expenses for the surviving clients are reduced (the % reduction is based on the "Expense adjustment upon the death of a co-client" setting in the Gear Icon > Settings > Other Assumptions tab).

Important Note: Protection Need

Please note that the protection need is the minimum death benefit required to ensure that the client ends their life with at least $1 left to their name. This is calculated based on the assumed plan variables for each projection (see Action Items - Life Insurance).

Single Plan

If you are planning for a single client (no co-client), the Life Insurance Analysis will function differently. Because there is no "surviving client" to plan for, we will instead calculate a protection need based on specific goals and expenses within the plan:

This is a simplified version of the joint life insurance analysis, primarily focused on providing for a client's children and/or grandchildren. The Protection Need in this case will be comprised of any college goals, plus a monthly expense number that you can set for a specific dollar amount and duration. It will also factor in how a client's investments can help meet those needs, discounting the protection need by the rate of return on the client's current portfolio. The protection need can then be compared to a client's current life insurance coverage, as well as any proposed additional coverage.