Do you know what should be the sum assured amount when buying your life insurance? Human Life Value or HLV is a term commonly used in the life insurance sector. In simple terms, human life value is an estimation of the financial value of a human life. This is an estimation of how much money you need to maintain the standard of your lifestyle and meet your financial responsibilities. Usually, HLV is calculated by estimating your income each year until retirement discounting for inflation and expressed in current value.
However, it is best to calculate HLV by estimating all the yet-to-be-fulfilled needs like your children’s education, marriage etc., plus all your outstanding liabilities such as loans and mortgages and also keeping in mind your current standard of living. It is better not to go by just your income from date till retirement because whatever be the expected income the needs will remain constant. You must make sure that the insurance cover must be equal or more than the human life value. The goal is that your dependents are well taken care of, whether you are there for them or not with the help of your life insurance policy.
This might be very confusing and difficult to do it all by yourself. So, it is best to approach your insurance agent today and make sure that you buy a policy that provides the right cover using the HLV calculation.