Do You Know your Human Life Value?

Life insurance is designed to help you provide financial protection to your family members, even in your absence. You must get sufficient coverage so that your family members don’t face any financial hardship. But how do you decide how much coverage is adequate? This is where the concept of Human Life Value (HLV)plays an important role.

is the present value of all your future income that you could expect to earn. It is defined as the total income individuals are likely to earn before they reach retirement age. It indicates the economic loss a family is expected to suffer due to the breadwinner’s untimely demise.Human life value helps you determine your life insurance needs based on income, savings, liabilities, and expenses. In case of your sudden demise, the income that supports the family will suddenly stop, leaving them vulnerable to facing financial hardship. But, if you have taken a life insurance policy with the right coverage based on your human life value, your family will have sufficient financial protection to maintain the same living standard and deal with the financial obligations (if any).

While calculating the human life value, you must consider the following important factors:

• Your current age
• The age you wish to retire
• Your monthly expenses. You must factor in everything, including medical, food, education, lifestyle, housing, travel, etc.
• Your liabilities like the outstanding loan, credit card payments, business debt, etc.
• Any significant future expenses like child education/marriage, buying a house.
• Current savings
• Details of your existing life insurance policy

You can use the human life value calculator to calculate your exact HLV. It is an easy-to-use online tool, where you must enter the above details, and the calculator will immediately compute the amount.Remember, the HLV is subject to change depending on your annual income, family condition, liabilities, and current life stage. For example, when you are 25 years old and have no dependents, the human life value or the insurance requirement will be different than the human life value when you turn 35 and have dependent children and spouse.Therefore, it is prudent to review the HLFV at different stages and adjust the policy coverage accordingly to ensure that your family is sufficiently protected always.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.