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As previously noted, life insurance proceeds received by a beneficiary generally are deemed to be free of income tax, but unless the policy is outside of the policy owner's estate, the death benefit generally will be included in the policy owner's estate for purposes of determining any estate tax liability. Taking this additional step in the process serves to solidify the need and its translation to the purchase of life insurance, if that's the appropriate step for a given individual or business. Thus, we seek to distinguish between the quantification of the loss and the translation of that potential loss to the need for life insurance to offset some or all of that loss. While the answer may seem obvious as to the loss of monthly earning power, it is by no means a given that everyone cares. Do you care? Yet the key questions to be asked are these: Is this important to you? An estate owner with $10 million of taxable value might be facing shrinkage of one-third to one-half of that estate because of taxes and liquidity costs; a family may be facing the loss of $5,000 per month of gross income if the wage earner dies before retirement. While typically this will lead to answering the question "how much life insurance do I need," ideally we would keep our focus on quantifying the need long enough to decide whether that loss or shortfall is tolerable or intolerable. inancial advisors and life insurance agents typically will help a client understand and quantify the loss of income or estate value whenever death might occur.