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Human Life Value Concept

by Beth Clothier

When determining how much value your income has for your family, the insurance company may use what is called the human life value concept. This concept was invented in the 1920s by Dr. Solomon S. Huebner, to establish what a family would lose in income upon the death of the sole or chief income provider. Dr. Huebner, a professor and pioneer in the field of life insurance, was responsible for this and many other developments to help both the insurer and the insured.

The human life value concept uses four factors to determine how much life insurance will be needed to protect your family and assets. These factors are annual income and expenses, years left until your retirement, and the expected value of the current dollar at the end of this period due to inflation. Using these factors, a reasonably accurate assessment of the value of your income can be made.

Here are a couple of examples of human life value:

1. Bob, a 40-year-old male, makes $60,000 a year. His monthly expenses, excluding all bills, total $550. He currently has $100,000 in life insurance, but is looking to provide more for his family. Using the human life value concept, Bob’s estimated value is $889,000. Because he already has $100,000 worth of life insurance, his extra estimated need is $789, 0000. Depending upon his actual debts and needs, he can determine if that amount is actually needed.

2. Rachel, a 28-year-old female, makes $30,000 a year. Her monthly expenses, excluding bills, are $325. She currently has no life insurance, and wants to make sure her debts are covered so that her family will not be burdened with them. Using the human life value concept, Rachel’s estimated value is $743, 000. However, because she has few actual debts and has yet to start a family, she will probably only need a small amount of coverage at this time.

3. Andrew, a 46-year old male, makes $150,000 a year. He is opting for early retirement at age 55, and his monthly expenses total $3500. He currently has $500,000 of life insurance. Based on the human life value concept, Andrew is worth $431,000, and therefore has no estimated need. Based on any personal savings and investments, and any debts, however, Andrew may actually need more coverage.

The human life value concept is only to determine a basic estimate of need. You may need more or less coverage depending upon personal circumstances, but this will at least give you some idea of what your income is actually worth to you and your family.

To get an estimate of how much life insurance coverage you will need, check our our Life Insurance Calculator.

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* provides free information concerning insurance products and services but is not an agency or an insurer. Not all products and services are available in all states, and no guarantees regarding same are made herein. Please speak to your insurance agent for more information.