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Human life value: know it and how to calculate

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Human life value: know it and how to calculate
December 18, 2018
Life is full of uncertainties and unforeseen circumstances. As a responsible person with dependent family members or other relatives, it is very important for you to appreciate the role that financial freedom and core monetary strength plays. Everyone wants to secure the future of their loved ones at all times and for this purpose, the various financial activities are driven by the need of having enough so that the finances of the loved ones do not suffer, even in our absence. This is where insurance comes as a solution to the financial woes and relieves the money-related stress from our lives. Having an insurance plan in place allows you to retain your financial corpus, while enriching your monetary flexibility.
 
A standard, traditional life insurance policy is very beneficial as unlike term insurance plans, it offers plan maturity proceeds to the policy holder on completion of the policy term. Besides, the policy entitles the nominee(s) of the policy holder to receive the total sum assured in the event of the policy holder's demise within the plan term. It acts as a complimentary addition to your investment portfolio and provides an assured return against the premiums paid. Life insurance also serves as an instrument for tax benefits under Section 80C of the Income Tax Act, 1961 and additionally, offers several benefits (in the shape of riders) that can be purchased together with the main plan.
 
Before purchasing a life insurance policy, you must compare the different features that are being offered by various insurers. One of the most basic and important factors that must be considered at the very outset is the amount of coverage required. For getting the best idea regarding the coverage that you must seek, it is important to calculate the human life value. The tool for this is the human life value calculator. This tool makes use of following factors while calculating the amount of coverage that you should aim for:
  1. The salary of the person: For a better calculation, you must mention your net salary and exclude any additional benefits.
  2. Regular income from various sources, apart from salary, like gains made through investments etc. or earnings that you may have as the owner of any rented property.
  3. The person's current age
  4. The age at which the person will retire (for salaried persons)
  5. Your liquid savings: This includes savings in bank excluding any FDs or RDs (Recurring Deposits)
  6. You bank FDs
  7. Your gross savings (apart from the two mentioned in points 5 and 6)
  8. Your loans and liabilities etc: This includes any personal loans, any outstanding home loans, student loan, vehicle loan etc.
  9. Existing coverage: This factor takes into consideration the fact you may already be insured under any existing policies (for example, under term plans or under any joint family floater schemes). Therefore, your current coverage scope, if any, must be duly mentioned.

HDFC Life offers HDFC Life Human life value calculator - an online tool that answers your insurance related queries and helps you make an informed decision in line with your specific requirements. For details, check HDFC Life Human Life Value Calculator

 

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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