When an automobile is involved in an accident, the amount of damage may be calculated easily. An automobile insurance company will reimburse the owner for the whole cost of the vehicle's damaged components. But how does one calculate the amount of loss in the event of a death? Is the individual worth Rs 25 lakhs, Rs 50 lakhs, or Rs 1 crores? This question is answered by the notion of Human Life Value.
What is Human Life Value?
The present worth of all your net worth that your family and you might anticipate to receive in case you are no longer around is known as Human Life Value (HLV).
In the event of a tragic incident, your family's income will abruptly cease. Your family may be left with little or no money, which may be insufficient to cover their needs. However, if you have purchased a life insurance policy with the appropriate level of coverage, you may be able to provide them with enough financial security. It may enable them to maintain their current living standards, repay existing debts, and achieve long-term objectives such as their children's further education.
How to Calculate Human Life Value?
You may calculate your Human Life Value with the aid of a calculator. When evaluating the worth of a human life, many aspects must be considered, including:
- Your present age and the age you want to retire are also important factors to consider
- Your stage of life
- Your recurring outlays (travel, housing, food, medical, lifestyle, education, etc.)
- Currently owed debts or EMIs
- Future financial objectives (home purchase, child's further education and so forth)
- Your investments and savings
- If you already have life insurance
- Inflation and discounting factor rate.
The worth of a human life will fluctuate based on your age, inflation, and other factors. These changes frequently take place at various times in one's life. Your human life worth when you're 25 and unmarried will vary from your human life value when you're 35 and a parent of a kid. As a result, it's a good idea to calculate your Human Life Value on a frequent basis.
Manually calculating your HLV might be time-consuming. You may quickly calculate your HLV with the aid of a Human Life Value calculator. It's important to realize that your HLV will fluctuate over time. As a result, it's a good idea to review this computation on a regular basis rather than treating it as a one-time task.
Frequently Asked Questions (FAQs)
Q1. Why is human life value important?
Human Life Value is a tool that helps you figure out how much life insurance you need based on your income, spending, savings, and obligations.
Q2. Who was the first person to introduce the notion of human life value?
1According to the American Safety Council, "The Father of Insurance Education," as Huebner is known, was a pioneer in the field of insurance education. He coined the term "human life value," which has since become a common way of determining individual’s insurance worth