Human Life Value Calculator

Formula

The formula to calculate the Human Life Value (HLV) is:

\[ HLV = \frac{I \times E \times (1 + r)^n}{(1 + r)^n - 1} \]

Where:

$ HLV $ is the Human Life Value.
$ I $ is the individual’s annual income.
$ E $ is the number of years the individual is expected to work.
$ r $ is the discount rate or the rate of return on investment.
$ n $ is the number of years until retirement or the expected remaining years of work.

What is Human Life Value?

Human Life Value (HLV) is a concept in insurance and economics that calculates the financial value or economic value of a human life. This value is determined based on the individual’s income, expenses, debts, and future financial responsibilities. The HLV is used to determine the amount of life insurance a person should have to ensure their dependents or beneficiaries are financially secure in the event of their death. It takes into account the individual’s current income, their age, their expected retirement age, inflation, and expected rate of return on investments. The HLV is not a measure of a person’s worth or value in emotional, social, or other non-economic terms but rather a tool to assess financial risk and plan for financial security.

Example Calculation

Consider an example where:

Annual Income (I): $50,000
Years Expected to Work (E): 30
Discount Rate (r): 0.05 (5%)
Years Until Retirement (n): 30

Using the formula to calculate the Human Life Value:

\[ HLV = \frac{50,000 \times 30 \times (1 + 0.05)^{30}}{(1 + 0.05)^{30} - 1} \]

This means that the human life value for this example would be a significant amount, reflecting the financial value of the individual's future earnings.