1. What is the Human Life Value Calculation?

The Human Life Value (HLV) calculation, developed by MetLife, estimates the economic value of a person's life for insurance purposes. It represents the financial loss that would occur if the person were to pass away prematurely.

2. How Does the Calculator Work?

The calculator uses the HLV equation:

Where:

• \( Income \) — Annual income ($/year)
• \( Years \) — Number of working years remaining
• \( Expenses \) — Annual personal expenses ($/year)

Explanation: The equation calculates the net economic value a person provides by considering their future earning potential minus their personal consumption.

3. Importance of HLV Calculation

Details: HLV helps determine appropriate life insurance coverage to protect dependents from financial hardship. It ensures adequate coverage to replace lost income and maintain family's standard of living.

4. Using the Calculator

Tips: Enter your annual income, expected remaining working years, and annual personal expenses. Use realistic estimates for accurate results.

5. Frequently Asked Questions (FAQ)

Q1: Why is HLV important for life insurance?
A: HLV helps determine the appropriate amount of life insurance needed to protect your family's financial future if you were to pass away unexpectedly.

Q2: Should I include all my expenses?
A: Include only personal consumption expenses that would not continue if you were no longer living (e.g., personal care, entertainment, personal travel).

Q3: How many working years should I consider?
A: Consider your planned retirement age minus your current age. Typically, this ranges from 20-40 years depending on your career stage.

Q4: Does HLV account for inflation?
A: The basic HLV calculation doesn't account for inflation. For more precise calculations, consider using inflation-adjusted values.

Q5: What other factors should I consider for life insurance?
A: Besides HLV, consider debts, mortgage, education costs for children, and final expenses when determining life insurance needs.