Human life value (HLV) estimates how much financial value your future earnings represent for the people who depend on you. It starts with your expected income over your remaining working years, subtracts what you would spend on yourself and pay in tax, and converts that stream into a present-day lump sum. The result is one way to estimate how much life cover would replace your economic contribution.
Why it matters
It anchors life cover in your family’s actual dependence on your income rather than in a round number. It is especially useful for younger earners, whose savings are still small but whose future earnings are large.
How to read it
- Assumptions drive the answer. Income growth, years to retirement, personal expenses and the discount rate all change the result substantially. Small changes to the discount rate can move HLV a lot.
- Add liabilities, subtract assets. A practical cover estimate adjusts HLV for outstanding loans, planned goals, existing investments and existing cover.
- Cross-check methods. The expenses-plus-liabilities method — what your family needs to keep its lifestyle and meet its goals — is a useful second view.
Common misconceptions
- “HLV is my net worth.” It is the value of future income, not of current assets.
- “A multiple of salary is the same thing.” Rules of thumb such as 10–15 times income ignore age, dependants and debts.
Note: The Insurance Cover Calculator shows each method with its assumptions and an indicative cover gap. It is an estimate for education, not an insurance recommendation.
Formula
HLV ≈ Present value of (Annual income − Personal expenses − Taxes) over the remaining working years. For a contribution C growing at g, discounted at r over n years: PV = C × [1 − ((1 + g) ÷ (1 + r))^n] ÷ (r − g)
Worked example
For illustration, assume a 35-year-old earns ₹15,00,000 a year, spends ₹3,00,000 on themselves and pays ₹2,00,000 in tax, leaving ₹10,00,000 a year for the family. Over 25 working years, with that contribution growing 5% a year and a discount rate of 8%, the present value is roughly ₹1.7 crore.
Figures are for illustration only — not a forecast or a recommendation.
Related terms
Term insurance
Pure life insurance that pays a fixed amount to your nominees if you die during the policy term, with no payout if you outlive it.
Sum assured
The cover amount in a life insurance policy — what the insurer agrees to pay your nominees on a valid claim.
Net worth
Everything you own minus everything you owe — a snapshot of your financial position at a point in time.
Inflation
The rate at which prices rise over time, which steadily reduces what a fixed amount of money can buy.