Human Life Value Calculator

Human Life Calculator is an online tool that helps you figure out your life insurance needs on the basis of income expenses, liabilities, and investments to secure your family's financial future.

Let’s see HLV meaning, importance, and more!

What is Human Life Value in Insurance?

HLV, in insurance, is a metric that showcases the economic value of an individual's life. HLV’s full form is Human Life Value.

Basically, it is a method that helps to assess how your untimely demise would affect your family financially. It calculates the present value of future earnings and other financial contributions to the family - incorporating the loss of income, financial support, and future obligations that may result from your demise. This gives you an accurate estimation of how much money your family would need in order to maintain the same standard of living if you were to pass away.

What is A Human Life Value Calculator?

A human life value calculator is a free and easy-to-use online tool for calculating the amount of money that should be set aside in order to provide for your family in the event of your passing away. A lot of factors go into this calculation including your

age, income, liabilities, dependents' financial needs, etc. Basically, this tool uses the HLV formula and assigns value to your life, making it easier for you to determine the amount of insurance coverage necessary to provide financial security for your loved ones.

Why Is Human Life Value Important?

Human life value holds particular significance when a family is solely supported by a single income source. Without proper coverage, the economic risk of suddenly losing the breadwinner of the family can have devastating effects, creating financial hardship that can last for years, if not generations. Human life value helps determine the appropriate amount of insurance coverage needed to adequately support both current and future expenses of financial dependents - i.e., people who depend on your income for their living. Quantifying your life in this way enables you to plan better and create strategies to secure a solid future for them.

Benefits Of Using The Human Life Value Calculator

Here are some of the advantages of using the HLV calculator -

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Finds The Economic Value Of Your Life
You can determine your economic worth with the help of HLV calculators. This information will help you understand the financial impact your absence will have on your family and dependents. With this knowledge, you can then take appropriate measures to secure your family's future should the worst happen.
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Finds The Right Amount Of Coverage
Knowing the amount of coverage you need to secure your family depends on many factors, such as your family's current and expected income, expenses, debts, and other financial obligations. The coverage you choose should be sufficient to help your family retain their standard of living even when you are long gone. This requires meticulous calculations. Without proper guidance, it can be difficult to find the same. However, the HLV calculator makes it easy for you to determine the exact coverage you need to protect your family from potential financial hardships in your absence.
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Helps Make Informed Decisions
By knowing the amount of coverage that is needed to meet the family's needs, you can confidently make informed decisions. This allows you to avoid paying for coverage you do not need or end up with insufficient coverage, thereby enabling you to make the most appropriate financial decisions for your specific needs.

How To Calculate Human Life Value?

Human life value can be calculated in different ways, using the HLV calculation formula. Here are the two most common ways -

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Need-Based Method
First, it assesses your goals and needs and evaluates various factors such as your current income, lifestyle, dependents, etc. Based on the analysis, this method estimates the total coverage your family may need to live a comfortable life in your absence.
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Income Replacement Method
To ensure financial security for your family, it is essential to determine how much you need to replace your current income. This method does just that. By accurately calculating the present value of future earnings, it provides a reliable way to determine the amount of income necessary for your family's financial security.

Steps to Calculate Human Life Value

Here is a list of steps you need to follow to find your coverage -

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Step 1:
Open the HLV calculator on our website. You will need to enter your current age and the age you envision retiring at.
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Step 2:
Next, you need to disclose your financial information. You will need to enter details of your income and the amount of life insurance coverage you currently have in place (if any).
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Step 3:
You will be asked to provide information about your financial dependents. A choice of four options will be presented to you - children, spouses, parents, and other family members. You will have to select the ones you want to secure with the life insurance policy.
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Step 4:
The final step is to click the ‘Next’ button, and the calculator will compute the HLV for you and display the results immediately.

How Much Life Insurance Cover Do You Need?

Choosing the right coverage is essential to ensure that your loved ones are protected financially in your absence. Your life insurance coverage will depend on the type of plan you choose.

1. For Term Insurance or Whole Life Insurance
An effective way to determine the right cover amount is to calculate the gap between what you’ll leave behind and what your family actually needs. Here's how you can find this gap -

Calculate the amount you are obligated to leave behind: This includes your short-term expenses, long-term financial goals, loans or other commitments, etc.

Calculate the amount you already possess:
This includes your savings, FDs, investments, etc.
Find the difference between these two amounts and you'll arrive at the exact cover amount you need to bridge the financial gap.

2. For Endowment, Money Back, and Child Life Insurance
Here is the best way to find the right cover -

  • First, note down the milestones you wish to cover. It can be your children's education, wedding, your spouse's education, etc.
  • Note down your finances, like existing life insurance covers, cash, gold, etc., and liabilities like debts, etc. With this information, you will be able to calculate how much money you can afford to spend out of your own pocket.
  • Estimate the costs associated with the milestones you plan to cover - taking into account inflation of 6 to 8% to ensure adequate and inflation-proof financial security.

HLV Calculator FAQs

What are the factors considered in HLV calculation?
The most common factors include your age, estimated retirement age, income, details about financial dependents, etc. It is important to note that the factors considered when calculating an HLV can vary depending on the methodology and calculator used.
Who invented Human Life Value?
The concept of human life value was invented by Solomon S. Huebner, widely regarded as the father of insurance education.
How can you assess your Human Life Value?
Our HLV calculator can help you estimate your Human Life Value (HLV). With just a few details, such as your age, estimated retirement age, income, dependents, etc., our calculator gives you the information you need in less than two minutes. This will help you gain an understanding of how much money your loved ones would need to live comfortably if something were to happen to you.
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