The human Life Value approach is the method of calculating the amount of Insurance value required for a family’s financial loss, if the bread winner of the family were to die today.
Human-Life Value Approach in Detail
Normally, the Human-Life Value is calculated on the insured person’s age, income, gender, occupation, annual wage, employment benefits, along with spouse and children’s financial information.
Human Life Value Offers Replacement of Income
Human Life value calculation gives you the sum of insured’s income. So an insured person’s income is calculated for how many years the income replacement required. You should consider the insured person’s average annual income as well as his growth annually.
Calculate how long the insured person’s income is required. How old the children are there and till how long they need money to support themselves.
What is the actual amount required for the family to lead the life ? It’s generally a certain percentage of the insured person’s income.
To calculate the future earnings, you need to do some calculations. Net salary amount needed for a particular time period. And now you need to calculate the current value of that amount.
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Thank You,
Jyoti Prakash Nayak, B.Sc MBA BA CFP
CERTIFIED FINANCIAL PLANNER & FINANCIAL WRITER
E: moneygrains.invest@gmail.com / WhatsApp: +91 8792238909
