Calculator to Determine the Value of a Human Life

Determining the value of physical damage is easy. However, how does one quantify your value if something unfortunate happens to you? This may be done using the concept of Human Life Value (HLV). It is estimated as the present value of all the future earnings you are expected to make for your loved ones. In other words, it is the estimated income you will earn until you retire. HLV calculates the economic loss your family will suffer in case of an untoward incident. 

Having understood this concept, you may want to know the purpose of calculating what human life value is. It is beneficial in determining the life insurance coverage that would be needed to ensure the financial security of your family in your absence. The calculation considers your income, expenditures, liabilities, and savings.Your family loses its income in the event of an unforeseen circumstance if you are the sole earner. They may face financial difficulties due to insufficient savings and may be unable to meet their regular expenditures. Such a situation may be avoided by procuring adequate life coverage.In case of an unfortunate incident, the insurance company will pay the policy benefits to your survivors. This will ensure their financial stability and help them meet their regular expenses, pay for children’s education, and repay any outstanding debt liabilities.How

What is a Human Life Value Calculator?

A human life value calculator is a free online tool that helps in determining the amount needed to effectively make up for the loss of income in the event of the death of an earning member. HLV calculator assigns a value to human life which makes it easier to purchase an insurance cover.

The human life value calculator requires certain data from the user to generate his/her life value, which includes the current age of the user, retirement age and the current income. The current age and the retirement age help in ascertaining the number of working years left for you(policyholder).

The current income along with the current age and retirement age help in determining your future cash flows. There is no fixed human life value formula applicable in insurance as the details required for estimation vary across various calculators.

Besides the age and income, the human life value calculator in insurance also requires the current expenses, assets and liabilities. Some of the HLV calculators may also need the details of any existing insurance cover. The aim of the HLV calculator is to provide you with an idea of the cover needed to secure the financial future of your family.

How to Use an HLV Calculator?

• The HLV calculator is a simple tool with an easy-to-use interface. A typical HLV calculator in insurance has certain columns where the correct data has to be provided.
• A HLV calculator asks for the gender, followed by your current age.
• You can choose between male and female and provide your current age.
• You have to provide the age at which you plan to retire and your current income.
• Followed by the estimated age of retirement and the current income, you have to provide the details of your assets and liabilities. Some HLV calculators just ask for the absolute number while others have a list of assets like mutual funds, savings A/C, bonds, etc.
• There is a list of liabilities similar to assets, which includes liabilities like home loan, education loan, etc.
• You can choose the assets and liabilities that are applicable to you and provide the value of the asset or liability.
• After providing the information, you have to click on the calculate button at the end of the page to get your human life value.

How does a Human Life Value Calculator Work?

The human life value calculator in insurance works in several stages. However, all the processes take place at the backend.

The human life value calculator estimates the current value of your income by using the current income and current expenses. The expense portions like EMI, insurance premium and personal expense are deducted from the current income.

To determine the size of the required corpus the present value of the series of income to be replaced has to be calculated. The present value is adjusted for inflation.

The corpus is adjusted for the existing liabilities The final required corpus is adjusted for the existing investments and insurance cover. 

What are the Factors Considered while Calculating HLV?

The factors taken into account while calculating human life value are:

• Age
• Gender
• Occupation
• Target retirement age
• Annual income
• Employment benefits
• Financial information on spouse and children

Benefits Of Using A Human Life Value Calculator

The human life value calculator provides a number of benefits:

1. Adds a Number to Human Life Value:

Human life is priceless and its value cannot be exactly estimated. The human life value calculator solves this peculiar problem and puts a number to human life value.

2. Helps in Deciding Insurance Cover:

Human life value calculator helps in deciding the amount of insurance cover required to ensure a financially secure future for your family.

3. Saves Money:

With a fair idea of the cover needed to secure your family’s future, you can confidently buy the right insurance policy. Many people purchase a higher insurance cover than they need and end up paying more in premiums.

Conclusion

The human life value calculator in insurance works in several stages. However, all the processes take place at the backend. The human life value calculator estimates the current value of your income by using the current income and current expenses. The expense portions like EMI, insurance premium and personal expense are deducted from the current income.

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