Though you can never put a value on a life, the economic value of human life may be measured through various financial factors, like income and investments. Often this evaluation is used for insurance purposes. HLV can be helpful to understand the financial loss your family may incur if anything were to happen to you, that way you can factor in how much life protection you need for your loved ones. By adding a few relevant details to the calculator, you can assess your human life value instantly.
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Protect your family from financial loss
By estimating the economic value of your life, you can identify the level of life insurance needed to protect your loved ones or dependents from financial difficulty if anything happens to you. The
human life value
approach is a concept universally adopted by insurance companies and underwriters to ensure a family’s standard of living does not get affected if the primary earner for the family dies or becomes disabled.
Using the human life value calculator
The human life value calculator is very easy to use and is designed to help you estimate the financial value of your life so that you can obtain the right level of life insurance. The calculator only requires some basic details about yourself and information about your annual income and investment returns. Once added to the human life value calculator, you can view your human life value based on your income growth and see adjustments for inflation as well.
How accurate is the human life value calculator
The human life value approach is only suitable to determine life insurance needs for income producing family members and thus differs significantly from the needs approach. Unlike other calculators, this HLV calculator adjusts for income growth and inflation so you can accurately identify an income replacement value if something should happen to you. However, the human life value approach is still subject to limitation due to the unpredictable nature of life and is not as widely used as the needs approach. Any unexpected changes to income can significantly impact an individual’s financial situation, making it difficult to estimate future earnings correctly.
How to use the human life value calculator – step by step
The human life value calculator has two parts: a questionnaire and integrated results. It requires certain details to produce accurate results. Let us review this together.
1. On the first line of the calculator, you may add your years until retirement. This is the number of years you expect to continue working and earning for your family.
2. You should add your current annual income to the second line of the calculator, not factoring in any income from your spouse.
3. If you have any investments, add your rate of return to the third line of the calculator.
4. Finally, include a percentage of expected annual inflation and a percentage of expected annual income growth on the fourth and fifth lines of the calculator, respectively.
Once this information has been added to the calculator, you may proceed to view your HLV results.
Your human life value results
Directly below the information intake you may view an integrated report of your human life value. Here you may see your HLV adjusted for your income growth in green, alongside your HLV further adjusted for inflation in blue. This may be important in determining your family’s future financial security and potential insurance needs in many years times, depending on when it is that you plan to retire. You will want to make sure your family will always be taken care of, not just a year or two after your passing or disability.
Remember to bookmark the human life value calculator and save it to the home screen of your smartphone. That way, you can access this tool in case your finances or insurance needs change. If you found this page useful, you can promote us on social media by using the share feature.