“Human Life Value” is a phrase used to represent an individuals economic value. More specifically, it represents how much money you’d need today (with interest earnings) to replace your projected income and employer sponsored employee benefits until retirement.
While it is occasionally used as a life insurance needs device, “Human Life Value” analysis is more commonly used is in computing damages (loss) that arise from an individuals premature death.
A tragic example of Human Life Value calculations can be seen in the governments analysis of settlements to be paid to the families of victims of the 9/11 nightmare. Using complex actuarial, economic, health and compensation analysis they came up with financial settlements for the survivors that hoped to replace the victims lost income, benefits,etc.
Similar calculations are done by courts, attorneys, insurance companies and others to establish values, awards and settlements for victims of traffic accidents, industrial accidents and other untimely deaths or disabilities.
Let’s say you are 37 years of age and earn $70,000 in salary. You receive employer sponsored health and retirement benefits valued at $5,000 per year and you project your salary and benefits will increase 4.5% annually. If you plan to retire at age 62 — What’s your Human Life or Economic Value?
The simple (no actuarial, demographic or economic data) 1stQuote HLV calculator says your total earnings (with growth at 4.5% annually) would be $3,842,958.17. Your Human Live Value today (assuming you received a lump sum and it was conservatively invested at 4% each year) would be $2,136,060.84. Invested at 5% per year would be $1,875,651.04.
If you’re interested in a quick calculation of your “Human Life Value” give the 1stQuote calculator a try. It provides an interesting perspective on the value of your daily efforts on the job, and may prove useful when thinking about life and disability insurance.
