Term Insurance

How to Calculate Human Life Value?

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When a car meets with an accident, the insurer compensates the owner for the total value of damaged parts of the car.

It is easier to calculate the estimate amount of loss if the car is damaged. But how would one estimate the cost of someone’s life? Is the person’s life worth INR 50 lakh or 1 Crore?

This is where the concept of Human Life Value comes into the picture. Human Life Value (HLV) is the estimate value of all the future income that you will earn for your family. It is defined as the total income an individual is expected to earn and calculates the economic loss a family would suffer in case of premature demise of the breadwinner.

Human Life Value (HLV) helps in determining your life insurance needs on the basis of your income, responsibilities and liabilities.

In case of your unfortunate demise, your family may be financially paralyzed having limited or no savings 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 financial stability and help them meet their expenses. It will help them maintain their current standard of living, pay outstanding loans and fulfill their long term goals like child’s higher education, etc.

How much life cover you need?

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 calculating human life value like;

  • Your current age and the age you wish to retire
  • Your lifestage
  • Your regular expenses (housing, travel, medical, food, education, lifestyle, etc.)
  • Your pending loans or EMIs
  • Future financial goals (child’s higher education, buying a house, etc.)
  • Your savings and investments
  • If you have any existing life insurance

The human life value will keep changing depending on your life stage, inflation, etc. These changes usually occur at different stages of life. When you’re 25 and single your human life value will be different from your human life value when you turn 35 and when you are a parent of a child. It is, therefore, prudent to consider calculating your Human Life Value regularly. To avoid a lot of hassles and confusion you can choose a flexible term plans like Edelweiss Tokio Life – Zindagi Plus which will provide you with a Top-Up and Life stage benefit.

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