General
Human Life Value Calculator
Annual Income
10k
1cr
Current Age (Years)
18
60
Monthly Expenses
10,000
1cr
Inflation Assumed
6
%
Retirement Age
60
years
Heavy Expenses
0
5cr
Existing Savings
0
5cr
Existing Insurance SI
0
5cr
Outstanding Loans
0
5cr
Inflation Assumed
6
%
Retirement Age
60
years
Human Life Value or Sum Insured Required
900,000
Human Life value is the money required to secure the lives of your loved ones or dependents in case you are no longer around.
It takes into account factors like, your income, current expenses, funds needed for future like education, weddings, loans, medical emergencies etc.
This calculator serves as a guide. The results are generated based on the information provided. It is not intended to be and must not alone be taken as the basis for an investment decision.
Human Life Value (HLV) Calculator
Life is the most uncertain reality of this universe. A lot is lost when a life is lost. To assign a value to life, we cannot attach a price tag to it. However, we can try and secure the monetary value of life through insurance.
To find how much insurance someone needs, the major factor widely used across the insurance industry is the Human Life Value or HLV. HLV, in simple terms, is the monetary value attached to a person.
It is the present value of all future income a person would expect to earn for their family. It directly indicates the financial loss a family would suffer in case of the untimely death of the family's breadwinner.
Dr Solomo n S. Huebner invented the concept of human life value. This calculation helps individuals determine life insurance needs based on their income, savings, expenses, liabilities.
Table of Contents
What is a Human Life Value Calculator?
What is a Human Life Value Calculator?
It is essential to determine the adequate amount of insurance cover that your family would need in your absence, to deal with the financial obligations. An HLV calculator does just that!
Human Life Value calculator is an online tool that utilizes the concept of Human Life Value and accordingly calculates that helps individuals to determine the right amount of insurance cover required by you. they need to purchase. Currently, there are numerous HLV calculators available online.
What are the Factors Affecting Human Life Value?
What are the Factors Affecting Human Life Value?
The key factors that affect Human Life Value include:
- Age
- Annual Income
- Monthly expenses (Household expenses, EMIs, school fees etc.)
- Outstanding loans and other liabilities
- Possible future expenses (child’s higher education, buying a house, etc.)
- Existing Investments
- Existing life insurance cover
How to Calculate HLV?
There are two common methods used to calculate HLV:
Income Replacement
This method is based on the premise that the insurance proceeds must be sufficient to replace the lost earnings of the deceased breadwinner of the family. So, by this method,
Insurance Cover = Current Annual Income x Number of Years left for Retirement
It's a simple method that gives you a close idea of the required sum assured, but a significant drawback is that it does not factor in inflation, income rise, and the major expenses on the way.
Need-Based Method
This method calculates the HLV based on several factors and consider inflation and discounting factors too.
It follows the following steps to determine HLV:
- Step 1: Determine your current income.
- Step 2: Subtract your expenses, insurance premiums, and income tax payments.
- Step 3: Identify the number of earning years remaining before your retirement.
- Step 4: Find the inflation and discounting factor rate.
- Step 5: Determine the present value of the earnings left after including inflation.
The above calculation is a bit complex, and an HLV calculator simplifies it for you.
How to use the Human Life Value Calculator?
A Human Life Value Calculator helps you to assess your requirements and accordingly determines the adequate insurance cover to secure your family. It takes into account all the income sources and liabilities. Factors in the number of earning years and the applicable inflation to arrive at the present value of all future incomes.
Step 1
Enter your personal details like annual income and current age.
Step 2
Enter your liabilities details like monthly expenses, heavy expenses, and outstanding loans.
Step 3
Enter your investment details like existing savings and existing insurance. The calculator automatically factors in the other variables like assumed inflation rate and retirement age.
What is the Importance of HLV?
What is the Importance of HLV?
As already said, you cannot measure the importance of a human life, but what you can do is determine the financial requirement that the dependents would need in case of an unfortunate demise of the breadwinner. HLV fulfils this objective. Here are the two features that make HLV important:
- Choose an adequate life cover for your dependents: You would never want your family to struggle with financial liabilities in your absence. Hence, it is of utmost importance to calculate an adequate life cover for your family. Human Life Value is an indicator for the same.
- Takes inflation into account: When we calculate how much our family would need to deal with financial requirements in our absence, we often miss out on factoring in inflation and liabilities. Liabilities don’t end with the breadwinner; instead, they come down heavily on the family after the earning member’s demise.
Similarly, inflation reduces the value of our savings and augments the expenses, thus hitting our financial planning if we haven’t factored in Inflation. Human Life Value calculation considers inflation and liabilities and thus helps you arrive at a much better indicative figure for your insurance coverage requirement.
Now that you know the importance of calculating the right amount of insurance coverage to secure your family’s future, it's time to use our Human Life Value Calculator.
In conclusion, the Human Life Value Calculator is a vital financial planning tool that helps quantify the economic value of a person’s life based on income, expenses, liabilities, and future financial goals. By understanding the factors that affect HLV and learning how to calculate, individuals can ensure their families are financially protected in case of unforeseen events. Knowing why HLV matters helps you make smarter choices about life insurance and long-term financial planning.
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