Calculate the Right Life Insurance Cover

1
Calculate the Right Life Insurance Cover
Get the right life insurance cover in 3 steps!
2
Human Life Value
The HLV figure you arrive at should help you make
a reasonably accurate assumption of the value of
your income.

• The Human Life Value (HLV) approach to
  calculating life insurance requirements accounts
  for 4 factors
• Annual income
• Annual expenses
• Number of years to retirement
• Inflation-adjusted cost of expenses

3
Step I

• Your Annual Income salarybonusemployee
  benefitsincome from investments.
• Deduct your personal expenses (food, clothes,
  travel, etc) from the above.
• What is left, is what your family consumes per
  annum.

4
Step II
The shortfall of the below mentioned expenses is
the amount that you should insure yourself for.

• See how many years are left till you retire.
• Project family expenses upto retirement,
  allowing for reasonable increments.
• Subtract any pension benefits your family gets
  upon your death.
• Add non-recurring expenses, like your childrens
  higher education.

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Step III

• Calculate the shortfalls present value,
  allowing for a reasonable rate of inflation.
• Factor in your existing investments by deducting
  your net worth and accounting for any big-ticket
  loans, to arrive at a reasonable HLV figure.

6
Know Your Life Cover Needs

• The HLV figure you arrive at should help you
  ascertain the amount of life insurance cover you
  need.
• Since HLV is a moving target, keep reviewing it
  every 5 years, at the least.

7
Thank You
Get the right life insurance cover in 3 steps!
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