Insurance coverage

Human Life Value (HLV) – The ideal value of your insurance coverage

Life insurance is an essential financial asset for any individual. It is always wise to cover yourself at any stage of your life, especially if you are the sole breadwinner. Life coverage will financially protect your loved ones if something bad happens to you.

When it comes to life insurance, one of the key elements is the amount of coverage. However, having any cover will not fully serve the purpose. You should understand that the coverage amount will be your replacement income in your absence. Therefore, it is essential to determine the right amount of coverage with HDFC Life HLV Calculator so that your family members can maintain the standard of living to which they are accustomed.

Unfortunately, life insurance policyholders in India are grossly underinsured. According to Swiss Re Asia Mortality Protection Gaps Survey 2019, 44% of households in India are more than 90% unprotected. This means that a person who needs Rs 1 crore insurance coverage in India is only covered for Rs 10 lakhs. This statistic is undoubtedly alarming.

What coverage do you need?

Mandeep Singh bought Rs 1 crore term insurance when he was single with no dependents. Like many people, he, too, thought the eight-digit figure was big enough insurance coverage. However, now with a marriage and two children, he thinks differently. Given his outstanding home loans, rising household expenses and ever-increasing inflation, he believes a cover of Rs 1 crore might be insufficient. In addition, he must also set aside a corpus for his children’s education, marriage and his wife’s retirement needs. However, Mandeep is unsure of the exact amount of cover that will cover his family’s expenses in the event of his death.

It’s here that HDFC Life Value of Human Life Calculator enters the scene. The value of human life represents the value in rupees of his life based on his income, savings and debts. The number is taken to figure out how much money would be needed to insure the lives of dependents with term insurance.

HDFC Life HLV Calculator will give Mandeep the present value of all future income he expects to earn over the rest of his working life, adjusted for inflation. This will help him determine the appropriate amount of coverage that will allow his dependents to lead a decent life in the event of an unfortunate event.

To better understand the value of human life, let’s look at the key steps followed when calculating it.

  • 1. Estimate your net income

The amount of insurance coverage is based on a person’s net income. Net income is the estimated total of your lifetime income minus your personal expenses, including EMI payments, insurance premiums, etc. It gives you the income you need to support your family. Net income will vary depending on various parameters such as your current age, retirement age, total income, personal expenses, outstanding loans, etc.

  • 2. Calculating the present value of your net income

The second step is to calculate the present value of the estimated future net income by discounting it with prevailing bank interest rates.

  • 3. Inflation adjustment

Inflation erodes the value of your money over time. Therefore, it is also taken into account when calculating the value of human life. Higher inflation means you need more coverage to meet your family’s needs.

The insurance coverage determined in this way will exactly replace your earnings. This will ensure that your family members will not face financial hardship in your absence.

Do you know the value of your human life?

As you see, calculating your human life value is essential before deciding on a term plan. So go to HDFC Life now and estimate your economic value with our simple ELV Calculator. And make sure you get a term plan like HDFC Click 2 Protect Life that offers your loved ones full coverage to achieve their financial goals. As we always say: #AdhuraNahiPuraLifeInsuranceLenachahiye.