|
Life is priceless! Nobody can attach a price tag to it. But let’s face it – at some point of time, you have to know your ‘value’ or ‘worth’, if you want your loved ones to lead a comfortable and dignified life even after you are gone. Everyone, especially young NRIs should know their ‘Human Life Value’. What is this value? How can you calculate it? Why should you? Your human life value Basically, your human life value is the total income that you would earn during the rest of your working life, expressed in the current value. It can also be explained as the current worth of your expected future earnings. In other words, it is the amount your dependents will require to maintain their present standard of living in your absence or due to your inability to earn in the future.
Knowing your human life value
Let us first understand why you must know your human life value. Generally, your current earnings and your family’s present quality of life are closely related to your insurance requirements. So you can make your human life value the basis for selecting an insurance plan that will ensure sufficient financial security for your family, in your absence.
Calculating your Human Life Value
Your human life value is calculated after taking into account your present age, present and expected future earnings and current and expected future expenses. Considering other factors like number of dependents, other investments and their expected earnings, taxes, overall expenditure of the family, inflation, other liabilities to name a few will give a more accurate value. A simpler and basic way of calculating human life value is to subtract all your expenses (including those of your dependents) from your total annual earnings.
Insuring your Human Life Value
Most insurance companies seem to focus on your current earnings and prefer to have you insured up to five to ten times of your annual earnings. Needless to say, how much should you exactly get yourself insured for will also depend on your lifestyle, other needs, priorities and liabilities.
None of us would really like to think that our worth depends only on how much money we earn! But it is definitely worth the effort to calculate your life’s value to estimate how much you need to provide for your family.
Have you calculated your human life value? Need help? Write to us here
| .gif)
