The Human Life Value Approach…

• The human life value approach is another way to determine life insurance needs.
• Human life value looks at the monetary value of a person's future earnings to dependents.
• To calculate the human life value, subtract the amount needed for self-maintenance from the person's net income.
• Self-maintenance includes all personal expenses as well as income taxes, life and health insurance premiums, and any other personal costs attributed directly to the wage earner.
• The remaining income is considered to be the amount that supports the rest of the family.
• The present value of future earnings is the human life value. This provides a starting point for deciding how much life insurance is needed to replace the income that would be lost if the wage earner dies.

Calculating Human Life Value…

• To determine how much income the wage earner would have generated for the family had he or she lived, insurers use different formulas.
• Usually, the tables and rates upon which the calculations of human life value are based depend on variables such as earningpotential, inflation and the projected number of working years.