Calculate human life value - the economic value of a person\'s life based on present value of future earnings minus expenses.
Human Life Value (HLV) Calculator
Calculate human life value - the economic value of a person's life based on present value of future earnings minus expenses.
Input your financial information
Formula
Years to Retirement = Retirement Age - Current Age. Number of remaining working years.
Net Annual Contribution = Annual Income - Annual Expenses. Amount available to support dependents after personal expenses.
Present Value of Future Earnings = Sum of [Net Contribution × (1 + Inflation)^Year / (1 + Discount Rate)^Year] for each year to retirement. Discounts future earnings to present value.
Human Life Value (HLV) = Present Value of Future Earnings. Represents the economic value of a person's life based on future earnings potential.
Recommended Coverage = Human Life Value. Starting point for life insurance coverage, but also consider debts, final expenses, and education funds.
Coverage Gap = Recommended Coverage - Existing Life Insurance. Additional coverage needed to meet HLV.
Human Life Value calculates the economic value of a person's life as the present value of future earnings minus expenses. It provides a baseline for life insurance coverage, but actual needs may include additional factors like debts and education funds.
Steps
Enter current age and expected retirement age.
Enter annual income and annual expenses.
Optionally enter discount rate (typically 3-5%) and inflation rate (typically 2-3%).
Optionally enter existing life insurance coverage.
Review human life value, present value of future earnings, and recommended coverage.
Additional calculations
Enter your financial information to see additional insights.
Human Life Value (HLV) is the economic value of a person's life, calculated as the present value of future earnings minus personal expenses. It represents the financial contribution a person makes to their dependents over their working lifetime.
The Core Concept
HLV answers: "What is the economic value of my life to my dependents?" It's calculated as: HLV = Present Value of (Annual Income - Annual Expenses) over remaining working years.
Why HLV Matters
HLV provides a baseline for:
Life insurance coverage: Starting point for determining coverage needs
Financial planning: Understanding economic contribution to family
Estate planning: Assessing financial impact of premature death
Risk management: Quantifying financial risk of death or disability
HLV decreases with age as remaining working years decrease. A 30-year-old with 35 years to retirement has higher HLV than a 50-year-old with 15 years.
2. Income and Expenses
Higher income and lower expenses increase HLV. Net contribution (income - expenses) is the key driver. Higher earners with lower expenses have significantly higher HLV.
3. Discount Rate
Higher discount rates reduce present value (more conservative). Lower rates increase present value. Use 3-4% for conservative estimates, 5-6% for moderate risk.
4. Inflation
Inflation affects both income and expenses. If both grow with inflation, net contribution remains constant in real terms. HLV calculations typically use real (inflation-adjusted) discount rates.
Application to Life Insurance
HLV as Baseline
HLV provides a starting point for life insurance coverage, but also consider: debts, final expenses, education funds, emergency funds, and spouse's earning capacity. Coverage needs may be higher or lower than HLV.
Additional Considerations
Debts: Mortgage, loans, credit cards
Final expenses: Funeral, medical bills, estate settlement
Education funds: Children's education costs
Emergency fund: 3-6 months of expenses
Spouse income: Alternative income source reduces needs
Conclusion
Human Life Value calculates the economic value of a person's life as the present value of future earnings minus expenses. It provides a baseline for life insurance coverage, but actual needs may include additional factors. Recalculate HLV annually or when circumstances change, as it typically decreases as you approach retirement.
FAQs
What is Human Life Value (HLV)?
Human Life Value is the economic value of a person's life, calculated as the present value of future earnings minus personal expenses. It represents the financial contribution a person makes to their dependents over their working lifetime.
How is HLV calculated?
HLV = Present Value of (Annual Income - Annual Expenses) over remaining working years. It discounts future earnings to present value using a discount rate, accounting for inflation and time value of money.
What is the discount rate?
Discount rate accounts for time value of money and risk. Typical rates are 3-5%. Higher rates reduce present value (more conservative), lower rates increase present value. Use 3-4% for conservative estimates, 5-6% for moderate risk.
How does inflation affect HLV?
Inflation reduces purchasing power over time. If income grows with inflation but expenses also increase, net contribution may remain constant in real terms. HLV calculations typically use real (inflation-adjusted) rates or nominal rates with inflation adjustments.
What is the difference between HLV and life insurance needs?
HLV calculates economic value based on earnings. Life insurance needs also consider debts, final expenses, education funds, and emergency funds. HLV provides a baseline, but actual coverage needs may be higher or lower.
Should I use HLV for life insurance coverage?
HLV provides a starting point for life insurance coverage, but also consider: debts, final expenses, education funds, emergency funds, and spouse's earning capacity. Coverage needs may be higher or lower than HLV depending on circumstances.
How does age affect HLV?
HLV decreases with age as remaining working years decrease. A 30-year-old with 35 years to retirement has higher HLV than a 50-year-old with 15 years. Younger individuals typically need more coverage relative to current income.
What about income growth?
HLV calculations can account for expected income growth. If income grows faster than inflation, HLV increases. However, many calculations assume constant real income (income grows with inflation) for simplicity and conservatism.
How do I account for spouse income?
If spouse has significant income, HLV and coverage needs may be lower as dependents have alternative income source. However, consider: what if spouse also dies, or if spouse income is insufficient to maintain lifestyle.
Should HLV be recalculated regularly?
Yes, recalculate HLV annually or when major changes occur: income changes, expenses change, age increases, retirement plans change, or family circumstances change (marriage, children, divorce). HLV typically decreases as you approach retirement.
Summary
This tool calculates Human Life Value - the economic value of a person's life based on present value of future earnings minus expenses.
Outputs include Human Life Value, net annual contribution, present value of future earnings, recommended coverage, coverage gap, status, recommendations, an action plan, and supporting metrics.
Formula, steps, guide content, related tools, and FAQs ensure humans or AI assistants can interpret the methodology instantly.
Embed This Calculator
Add this calculator to your website or blog using the embed code below:
<div style="max-width: 600px; margin: 0 auto;">
<iframe
src="https://mycalculating.com/category/finance/human-life-value-hlv-calculator?embed=true"
width="100%"
height="600"
style="border:1px solid #ccc; border-radius:8px;"
loading="lazy"
title="Human Life Value Hlv Calculator Calculator by MyCalculating.com"
></iframe>
<p style="text-align:center; font-size:12px; margin-top:4px;">
<a href="https://mycalculating.com/category/finance/human-life-value-hlv-calculator" target="_blank" rel="noopener">
Use full version on <strong>MyCalculating.com</strong>
</a>
</p>
</div>
Calculate human life value - the economic value of a person\'s life based on present value of future earnings minus expenses.
How to use Human Life Value (HLV) Calculator
Step-by-step guide to using the Human Life Value (HLV) Calculator:
Enter your values. Input the required values in the calculator form
Calculate. The calculator will automatically compute and display your results
Review results. Review the calculated results and any additional information provided
Frequently asked questions
How do I use the Human Life Value (HLV) Calculator?
Simply enter your values in the input fields and the calculator will automatically compute the results. The Human Life Value (HLV) Calculator is designed to be user-friendly and provide instant calculations.
Is the Human Life Value (HLV) Calculator free to use?
Yes, the Human Life Value (HLV) Calculator is completely free to use. No registration or payment is required.
Can I use this calculator on mobile devices?
Yes, the Human Life Value (HLV) Calculator is fully responsive and works perfectly on mobile phones, tablets, and desktop computers.
Are the results from Human Life Value (HLV) Calculator accurate?
Yes, our calculators use standard formulas and are regularly tested for accuracy. However, results should be used for informational purposes and not as a substitute for professional advice.