A proper financial planing advisor/ insurance agent should educate their clients on this human life value workings before selling a life insurance. Without doing this analysis, any financial planning would be incomplete and will be of no use.

Each and every thing made by man has a financial value. All the artificial things which are covered under general life insurance can be financially valued by its purchase price, selling price, etc. So the loss of a general object like car or bike or mobile can be measured by means of its market value on the date of loss. In life insurance the loss is not a object or a thing but LIFE. Same like other products/objects, human life is also meant to have some financial value. Since life doesn't come with a purchase price or selling price, there should be some alternative options to evaluate the human life Value.  Each Insurance company has its own separate set of formulas and calculations to find out the human life value. Lets first understand what does human life value really mean.

  •  Human life value is nothing but the total money you will earn in future for your family.
  • It indicates the total financial loss suffered by your family in your absence.
  • Human life value shows your capacity to earn in future
  • It is the total salary/ income you may earn for your family in future
  • It is measured by your current annual income and age into consideration. suggests you to follow the below simple calculation to understand your human life value.


Example: Mr Arun aged 30 working in a MNC company has an annual income of Rs.500000. He may work until 60 or even more until he thinks he is fit to work.   If we calculate 60 as his retirement age, he will work for another 30 years. Assuming that the income is constant, the minimum loss to his family in his absence is 30X500000= Rs.15000000.

  1. In the above example Human life value  of Mr Arun is 15000000 as on current date(it may vary if his income increases)
  2. This is the minimum required sum assured that Mr Arun needs to protect his family financially
  3. This is the optimal cover Mr Arun need to look for.
  4. suggests you to take a term insurance plan for getting the maximum risk cover with minimum premium

In simple words, Human life value means the amount of money required to  maintain the same standard of living of your family in your absence.

Leave a Reply