Read the Beforeitsnews.com story here. Advertise at Before It's News here.
Profile image
By Credit&MoneyBasics
Contributor profile | More stories
Story Views
Now:
Last hour:
Last 24 hours:
Total:

How to Determine Human Life Value

% of readers think this story is Fact. Add your two cents.


How to Determine Human Life Value

What is it?

Human Life Value shows a person’s earning potential. It is a way to calculate the Life Insurance needs of a person. By this method, the level of financial loss a family will suffer in the case of sudden death of the insured person is considered.

It helps to calculate the monetary value of a person’s life on the basis of their income, savings and liabilities. It shows the loss of income and increase in liabilities that their family will face in case of the sudden demise of the policy holder. It helps to determine an amount that is suitable as life insurance coverage for the policy holder and can take care of their family’s needs.

Factors to be considered in Human Life Value Approach-

There are majorly four factors that need to be considered while calculating Human Life Value-

  1. Your Profile-

It includes 2 fields-

  • Your Current Age-

You need to mention your age as per your last birthday. It is better to put in the age as per your government IDs because this way you can purchase the policy without any hassle.

  • Your Retirement Age-

For salaried people, the official age of retirement is 60 years, but for this calculator you can choose your age of retirement as per your desire. In this calculator you can select your retirement age between 35 to 70 years.

  1. Your Savings-

It includes 3 fields-

  • Cash in bank-

For this, you need to enter your cash savings total in your bank account as of the date on the form. This amount should only reflect cash that is ready to use in your deposits. The amount can be from 0 to Rs. 50 lacs.

  • Fixed Deposits-

You need to key in the amount between Rs. 0 and 50 lacs that you have invested towards a fixed deposit.

  • Other Savings-

It requires a total of any other savings that you have made as of the date on the form. It will include savings in the form of gold, bonds, etc.

  1. Your Liabilities-

This includes 5 fields-

  • Home Loan (outstanding)-

You need to fill in the unpaid or outstanding amount of your home loan, if any.

  • Personal Loan (outstanding)-

Mention the outstanding part of the loan, if any.

  • Education Loan (outstanding)-

You need to mention if you have taken any education loan for your child and still have not paid it.

  • Motor Loan (outstanding)-

You need to mention the total of outstanding EMIs for the loan taken for any vehicle.

  • Any Other (outstanding)-

You need to mention any other loan which is yet not repaid.

  1. Your Income-

It includes three fields-

  • Your Salary-

You need to mention your net salary as received from the employer because your gross salary includes various benefits.

  • Existing Life Cover-

This means the total value of all the covers under the various life insurance policies that a person currently holds.

  • Any Other Income-

It includes any income that you earn except salary income. The value can range from Rs. 0 to 1 crore. It includes;

Income from house property

Profits and gains from business or profession

Capital gains

Income from other sources

This method is primarily used for the families who are looking for insurance cover as it determines the amount of money which will be required to replace the loss of income for the family in the event of sudden death of policy holder. You need to consider the post-tax income and adjust the expenses incurred during the policy holder’s earning period.

Calculating Human Life Value to decide insurance needs-

To calculate Human Life Value, it is important to take estimate of the expected future earnings of the insured person. Compare the expected future earnings with the present income at the disposal of the family.

Here is the step-wise guide to assist you-

Step 1-

First you need to estimate the earnings of policy holder for a specific time period. Understand for how many years the income replacement would be required. Consider the policy holder’s average annual income as well as future income appreciation as expected. While calculating life insurance requirements, the growth of earnings need to be considered.

Step 2-

An estimation of annual taxes payable and living cost to be incurred is deducted from the policy holder’s income. The actual amount of money required to cover a family’s needs is a certain percentage of policy holder’s income.

Step 3-

Calculate the duration as to for how long the replacement income will be required. Study how old the policy holder’s dependents are. The time period for which replacement income will be needed would be until the time the dependents are mature enough to financially support themselves.

Step 4-

You may need financial calculator to calculate future earnings of the policy holder. Net salary required for stipulated time period. Calculate the current value of future earnings by using an assumed rate of returns.

Conclusion-

Human Life Value only gives you the amount of money that would be required as a replacement of the income of the policy holder. It does not consider the lump sum amount payed on the death of policy holder. It gives you’re a cursory estimate of a person’s insurance needs. It does not consider every financial aspect of a person’s life and this differs from person to person.

 

 



Before It’s News® is a community of individuals who report on what’s going on around them, from all around the world.

Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.

"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.

Please Help Support BeforeitsNews by trying our Natural Health Products below!


Order by Phone at 888-809-8385 or online at https://mitocopper.com M - F 9am to 5pm EST

Order by Phone at 866-388-7003 or online at https://www.herbanomic.com M - F 9am to 5pm EST

Order by Phone at 866-388-7003 or online at https://www.herbanomics.com M - F 9am to 5pm EST


Humic & Fulvic Trace Minerals Complex - Nature's most important supplement! Vivid Dreams again!

HNEX HydroNano EXtracellular Water - Improve immune system health and reduce inflammation.

Ultimate Clinical Potency Curcumin - Natural pain relief, reduce inflammation and so much more.

MitoCopper - Bioavailable Copper destroys pathogens and gives you more energy. (See Blood Video)

Oxy Powder - Natural Colon Cleanser!  Cleans out toxic buildup with oxygen!

Nascent Iodine - Promotes detoxification, mental focus and thyroid health.

Smart Meter Cover -  Reduces Smart Meter radiation by 96%! (See Video).

Report abuse

    Comments

    Your Comments
    Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

    MOST RECENT
    Load more ...

    SignUp

    Login

    Newsletter

    Email this story
    Email this story

    If you really want to ban this commenter, please write down the reason:

    If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.