Human Life Value (HLV) Calculator

If you have ever wondered how to estimate the financial consequences following the loss of income on your death, using a human life value (HLV) calculator would be your best bet. This value should guide you towards identifying the death benefit amount that your dependents will be entitled to out of your term life insurance policy.

What Is HLV?

Human life value or HLV is an indicator of your insurance requirement based on your income and its future worth. It is defined as the present value of your future earnings, liabilities, savings, and investments. Based on your HLV, you can gauge the finances your dependents will need to fund their expenses in your absence or unfortunate demise. Basically, you should insure a cover that is equivalent to your HLV for the people that depend on you to sustain their lifestyle.

Now you can use the HLV calculator that simply requires a few inputs from you and offers accurate results in an instant. Note that it is advisable to keep visiting the HLV calculator at different stages of life considering that your needs will keep changing.

How Is HLV Important?

HLV is an important metric to determine insurance needs if you have family members depending on you for finances. When choosing an insurance cover, you should ensure that it is as comprehensive as possible to enable a smooth transition for your family after your death. Having an idea of the financial obligations and ensuring that your dependents don’t have to struggle to keep up with those is why calculating your HLV is important.

Briefly, calculating your HLV will help you address the following uncertainties:

• You can assess if your current term life cover amount is sufficient with the inflation rate.
• If there has been a new addition to your family, say a newborn, you can identify if the cover amount suffices their needs as well.
• In line with the above two pointers, you will be in a position to analyze if you need another term life insurance cover.
• You can estimate how much more your second life cover should be worth to arrive at a well-rounded, comprehensive figure.

How Is HLV Calculated?

HLV is calculated by factoring in the following components:

• Current Age
• Target Retirement Age
• Occupation
• Annual Income
• Employment Benefits
• Information on Dependents
• Current Savings
• Loans / Debt Obligations
• Existing Life Covers

The basis for HLV calculation is primarily two-fold. The first basis for calculation is Income Replacement and the second is Need-based calculation.

1. Income Replacement - The method estimates the regular income that your family will need from the insurance payout to support themselves.

2. Need-based - This takes into consideration the specific needs that the insurance cover is expected to cover, such as loans, mortgages, etc. Need-based calculation can also be used to finance goals such as child education, marriage, etc.

Calculating HLV may seem complicated to be done manually given that a lot of factors have to be considered.Your HLV at 25 will be different from what you shall need at the age of 35. Therefore, use the HLV calculator featured on our website at regular intervals to keep updated about your insurance needs.