How much insurance you need

Human life value is an estimate of the financial value of a human life. In insurance, this value is used to determine the amount of insurance that a person should buy. Simply expressed the sum insured must equal the human life value. Human Life Value is defined as the Present Value of Future Income that you could expect to earn in rest of your Working Span

The most common way to assess human life value is to estimate your income each year until you expect to retire, typically 60 years. This income stream then needs to be discounted for inflation and expressed in current terms. The estimation process can be considerably simplified if you assume that your income will increase in line with inflation. Then human life value will be your current income multiplied by the number of years until you turn 60. So, for a 40-year-old the human life value will be 20 times the current income.

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