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HUMAN LIFE VALUE

Richa Chandra Winter Intern@ HDFC Life

10 gm Gold Coin ..COST


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????

1 Litre PETROL

COST ????

House in Swaroop Nagar


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COST ????

A Doctor.

COST ????

Human Life Value Concept


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HLV = expected life time earnings of an individual in rupees. what is the total income that the individual is expected to earn over the remainder of his working life, expressed in present Rupee terms.
Put simply, Human Life Value is the present value of your future earnings.

Why HLV ?
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Protection

Financial Support Security

Your Pyramid of Living


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When You Earn and Enjoy

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When You are GONE

Your HLV depends on


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Your Curren t Age


Inflation and Debt Liabilitie s

Marriage and education expenses, household expenses, medical expenses etc.

HLV Calculator - Snapshot


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* This is the money you spend on yourself & towards taxation ** Anything that can be converted into cash in the next 7 days can be termed as a liquid asset e.g. Cash, FD, Bank Savings, MFs, Shares etc # This is the amount outstanding against you e.g. housing loan, personal loan, credit card outstanding etc. ## This would be the cost or value of your dreams & aspirations related to -- Your child's education -- Child's marriage -- Holiday planning -- Retirement planning -- Asset/Wealth creation like

Problem Statement
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Let us take an example of Mr. Rajesh whose annual income is Rs. 8Lacs and has a spouse and two kids of 8yrs and 10 yrs. But, unfortunately, he suddenly dies at an age of 35yrs. Considering 60yrs to be the retirement age, we can say that his family will have to suffer the income loss for coming 25 yrs. Let us calculate Mr. Rajeshs current worth.

HLV Calculation
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Particulars Mr. Rajesh Annual Income Present Age Rs. 8,00,000 35 yrs

Remaining Working Years


Monthly Salary Net Monthly Contribution to family Net Annual Contribution to family Loss in Income due to sudden demise(for 25 yrs) Personal Expenses@30% Average Current Worth Bank FD Rates Average Annual Contribution to Family

25 yrs
Rs. 67,000 approx. Rs. 40,000 Rs. 4,80,000 Rs. 8,00,000 * 25 = Rs. 2,00,00,000 Rs. 60,00,000 Rs. 2,00,00,000 Rs. 60,00,000 = Rs.1,40,00,000 8% 8%of Rs. 1.4cr = Rs. 11,20,000

Why Insure ?
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If you are willing to give up your life for your family, why dont you insure it for them ?

Its too bad enough to die. Why do it for free?

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Why HDFC Life


Risk Control Framework Maximisation of stakeholder's value

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Consistent, and stable investment returns Match the investor's longterm and return expectations

Irrespective of the market condition

References
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http://www.my-life-insured.com/human-life-valueconcept.htm http://www.rediff.com/money/2007/jan/25perfin.ht m http://personalfinance201.com/insurancesectionmenu-53/13-fundamentals/173-human-lifevalue.html http://www.hdfcbank.com/personal/investments/H LV_calculator/hdfc.htm http://wealth.moneycontrol.com/yourstartupkit/life/ human-life-value-what-is-it-worth-/12872/0 http://www.iciciprulife.com/public/Lifeplans/Human-Life-Value.htm

References as on December 16, 2011 at 2200 hrs

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Thank You !!!