How much Insurance Coverage do I need? – HLV

Often when some one comes across the  question – How much Insurance Coverage do I need? – the general tendency is to think that I have enough Insurance Coverage. Some may go a little further and may end up saying, “I don’t want any insurance.” Some will also think that Insurance is not a profitable investment.

These are physically different answers but if you go a little deep, it is easy to understand that the core of all these answers point to a simple problem. “I don’t know how much insurance I need.”


In vehicle insurance or general insurance, it is easy to calculate the actual value of the material to be insured and decide the face value of insurance coverage.It is not that easy to calculate the value of a human beings in Life Insurance, to find out the optimum insurance requirement .

The best method to find out the required insurance coverage is based on the Human Life Value concept(HLV), developed by Dr. S. S. Huebner. Human Life Value (HLV) concept follows the Income-replacement theory. What ever income which is used to support the family has to be replaced through Life Insurance.

How much Insurance coverage do you need?

How much Insurance do you need
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For Example, Let us calculate the Insurance Coverage required for Mr. Arun having an age of 32 years. His expected retirement age is 60 years. Let his current monthly income be Rs. 30000. Let us assume that the total personal expenses of Arun is to the tune of Rs. 5000. Let the bank interest rate be 8% and the assumed inflation rate be 4%.
Amount going to family every month is arrived by finding the difference between the Income and Personal expense and will be equal to Rs. 25000 per month. While taking account of 4% inflation the income need to be replaced comes to Rs. 2,51,89,108. The current value of this amount based on 8 % interest is calculated and from that the we can find the insurance coverage required is coming to 30 lakhs.
Answer to the question, “How much Insurance coverage do you need?”- varies based on Age, Income, Personal Expenses, Retirement Age, Prevailing Interest Rate, Inflation Rate etc.
Calculate your insurance coverage requirement using The Human Life Value calculator provided at Insurance Funda.

Anish L J
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Anish L J

Anish L J is a finance, insurance and software consultant with more than 18 years of experience in these fields. He thoroughly follows developments in insurance and finance. 'INSURANCE FUNDA' (www.insurancefunda.in) is his endeavour to provide simple and solid solutions in the Insurance and Finance sectors.
Anish L J
Follow me

Anish L J

Anish L J is a finance, insurance and software consultant with more than 18 years of experience in these fields. He thoroughly follows developments in insurance and finance. ‘INSURANCE FUNDA’ (www.insurancefunda.in) is his endeavour to provide simple and solid solutions in the Insurance and Finance sectors.

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