Human Life Value

 

Human Life Value !

 

A human life has an economic value only if some other person or organization can expect to derive a pecuniary advantage through its existence. If an individual is without dependence then that life has no monetary value, such an individual is rare. In general most of the income producer has dependents. So such individual should protect his earning capacity for the benefit of dependents by insurance protection of an approximate amount. The question is that how much an approximate amount should be protected.

In assessing this value in terms of money we should take into account not only the cost his present living also future cost of living

It is no doubt true that no value can be put on the human life value. But the fact is that, there is loss of income to the family on death or retirement of a breadwinner.

It is visualized that the actual income earning starts around the age 22 to 25 years reaches the peak at the retirement than fall to negligible amount. In the event of death, it stops abruptly. Stoppage or reduction in income results in the near collapse in the family standard.

The concept of human life value enables the agent to assess the extent of life insurance cover required for preserving or securing this income on stoppage by death at advanced age.

To arrive at such H.LV. Following are basic principle

1.    Arrive at a average yearly income  say (E )

2.    Deduct the cost of his own expenditure say (M) which may not be there after his death.

3.     Estimate the number of year of future earning life say (N), this is up to the actual retirement age.

4.    Discount E-M for N number of number of year at a reasonable current interest rate.

Thus, we get the present cash value that can be placed on person’s economic value to his family, which will be his true insurable value.

 

              SO INSURE THE PEOPLE AS PER THEIR HLV!