1. What is Human Life Value (HLV)?

Human Life Value (HLV) is a financial concept used in life insurance to estimate the economic value of a person's life. It represents the present value of future income that would be lost if the person were to die prematurely, helping determine appropriate life insurance coverage.

2. How Does the Calculator Work?

The calculator uses the HLV formula:

Where:

• \( Income \) — Annual income (currency/year)
• \( Expenses \) — Annual expenses (currency/year)
• \( Years \) — Number of years until retirement or expected working years

Explanation: The formula calculates the net economic contribution a person makes to their dependents by subtracting expenses from income and multiplying by the number of productive years remaining.

3. Importance of HLV Calculation

Details: Accurate HLV calculation is crucial for determining adequate life insurance coverage, ensuring that dependents are financially protected and can maintain their standard of living in case of the insured's untimely death.

4. Using the Calculator

Tips: Enter annual income and expenses in currency units, and the number of years until retirement. All values must be valid (income ≥ 0, expenses ≥ 0, years > 0).

5. Frequently Asked Questions (FAQ)

Q1: Why is HLV important for life insurance?
A: HLV helps determine the appropriate amount of life insurance coverage needed to replace lost income and maintain the financial stability of dependents.

Q2: What factors should be considered in HLV calculation?
A: Besides income and expenses, consider future earnings potential, inflation, existing assets, and specific financial goals of dependents.

Q3: How often should HLV be recalculated?
A: HLV should be recalculated periodically, especially after major life events such as marriage, birth of children, career changes, or significant changes in income.

Q4: Are there limitations to the HLV approach?
A: Yes, HLV doesn't account for non-economic contributions (e.g., childcare, household management) and may need adjustment for specific family circumstances.

Q5: Should HLV be the sole factor in determining insurance coverage?
A: While HLV provides a good baseline, other factors like debts, education funds, and specific family needs should also be considered for comprehensive coverage.