Human Life Value Calculator (HLV Actuarial Method)
Calculate your Human Life Value (HLV) using the actuarial income replacement method endorsed by the Actuarial Society of India. Computes the present value of your future lifetime earnings dedicated to your family's financial security.
For an earner aged 32 with ₹15,00,000 annual income, your actuarial Human Life Value is ₹2,94,39,256, requiring ₹3,15,00,000 in pure term life cover after factoring in liabilities and existing savings.
Earnings & Economic Assumptions
Calculate the present value of future lifetime earnings dedicated to your family's support.
Self expenditure deducted.
Annual salary increment.
Risk-free G-Sec yield.
Mutual funds, EPF, PPF, existing term policies.
Recommended Life Insurance
₹3,15,00,000
Gross Human Life Value: ₹2,94,39,256
Present Value Earnings
₹2,94,39,256
Discounted family surplus
Family Annual Share
₹11,25,000
75% of gross income
Outstanding Debts
₹30,00,000
Full loan payoff
Existing Assets Offset
₹10,00,000
Deducted from need
Actuarial Assessment:
Based on your remaining 28 earning years until age 60, your net present financial value to your family is ₹2,94,39,256. After adding outstanding liabilities of ₹30,00,000 and deducting existing assets/insurance of ₹10,00,000, your recommended life insurance cover is ₹3,15,00,000.
Recommended Cover
₹3,15,00,000
- What it is:
- An actuarial Human Life Value (HLV) calculator for determining scientific life insurance coverage.
- What it calculates:
- Present value of future family economic contributions, net insurance gap, and recommended term insurance cover.
Key Assumptions
- Personal consumption percentage is deducted from gross income.
- Future earnings are discounted at long-term risk-free bond yields.
- Liabilities are fully added and existing assets subtracted.
How it works
Economic Contribution: Your current annual income is adjusted by subtracting personal living and maintenance expenses (typically 25%–30%) that you spend exclusively on yourself.
Income Growth: The family's annual financial share is projected to grow at your expected salary increment rate (e.g. 7%–8% p.a.) over your remaining working years until retirement.
Discounting to Present Value: Future earnings are discounted back to today's terms using the risk-free rate of return (e.g. 7% long-term G-Sec bond yield) to establish your net present economic worth.
Balance Sheet Adjustment: Outstanding debts (home loans) are added to the liability, while existing liquid investments and life insurance covers are subtracted to arrive at your net insurance gap.
Formula
HLV = Sum[ (Annual Family Contribution × (1 + g)^t) / (1 + r)^t ] + Liabilities - Existing Assets
- g
- = Expected annual income growth rate (e.g. 7%)
- r
- = Discount rate / risk-free return rate (e.g. 7%)
- t
- = Years remaining until retirement age
- Family Share
- = Gross income minus personal maintenance consumption
HLV represents the capital amount that, if invested in safe government securities today, would replace your exact monthly paycheck for your family until retirement.
Example calculation
Age 32 Earner with ₹15L Income & ₹30L Loan (Actuarial Valuation)
- Working Years Remaining
- 28 Years
- Annual Family Financial Contribution
- ₹11,25,000
- Present Value of Future Net Earnings
- ₹2,94,39,256
- Home Loan Liability Added
- ₹30,00,000
- Existing Financial Assets Deducted
- ₹10,00,000
- Recommended Pure Term Life Cover
- ₹3,15,00,000
Frequently asked questions
What is Human Life Value (HLV)?
Why is HLV better than simple 10x income rules of thumb?
Does HLV change over time?
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Reviewed by Pradipta Ray, Editor · Updated