- Human Life Value (HLV) helps in determining your life insurance needs on the basis of your income, expenses, savings and liabilities.
- Human Life Value is the present value of all future income that you could expect to earn for your family.
- A Human Life Value calculator can help you arrive at your life insurance requirement.
When a car meets with an accident, the amount of damage can be estimated straightforwardly. A car insurer will compensate the owner for the total value of damaged parts of the car. But how does one estimate the amount of loss in case a person dies? Is the person worth INR 50 lacs, 1 crore or 1.5 Crores?
The concept of Human Life Value answers this question.
Human Life Value (HLV) is the present value of all future income that you could expect to earn for your family. It is defined as the total income an individual is expected to earn until retirement. It indicates the economic loss a family would suffer in case of early demise of the earning member.
Human Life Value (HLV) helps in determining your life insurance needs on the basis of your income, expenses, savings and liabilities.
In case of an unfortunate event, your income that supports your family will suddenly stop. Your family may be left with limited or no savings that may not be enough to meet their expenses.
However, if you have taken a life insurance policy with the right amount of life insurance cover, it will provide them with adequate financial protection. It will help them maintain the same living standard, pay outstanding loans and fulfill their long term goals like child’s higher education, etc.
How much life insurance should you take?
A Human Life Value calculator can help you arrive at your Human Live Value. Simply put the life insurance amount that you will need. Several factors need to be taken into account while arriving at the value. They include:
- Your current age and the age you wish to retire
- Your monthly expenses (housing, travel, medical, food, education, lifestyle, etc.)
- Any outstanding loans you may have
- Possible future expenses (child’s higher education, child’s marriage, buying a house, etc.)
- Details of your existing life insurance cover and
- Your current savings
Calculating your HLV manually may get complicated. You can take the help of Human Life Value calculator to find out your HLV immediately. Click here to calculate your HLV.
It is important for you to remember that your HLV will keep changing, depending on your life stage, your annual income, family condition, etc. These changes usually occur at different stages of life. When you’re 25 and single your human life value (or life insurance requirement) will be different from your human life value when you turn 35, are married, and the parent of a child. It is, therefore, prudent to revisit this calculation regularly and not see this as a one-time activity.
