Monday, July 23, 2007

What is your Human Life Value

Heard of this yaksha question: What is the greatest mystery on earth? Yudhisthir answers, "Every one has to die. But no one thinks that for himself. This is the greatest mystery."

That, I feel, is the paradox that makes people avoid life insurance!

That also makes agents take the wrong line of selling Insurance as a tax saving and/or Investment product (ULIP).

So what should we do?

Start with calculating your Human Life Value (HLV). A very simple way of looking at it is as follows. Imagine a monthly income of Rs 10000 and the net income provided to the family is Rs 8000 after deducting Rs 2000 for personal expenses. Thus the annual income provided to yr family is Rs 96000. The amount of money which will earn Rs 96000 pa at 8% interest rate is Rs 12,00,000. This is only a representation of the value of HLV. It is not the exact way of calculating yr HLV.

The future income growth, yr income generating assets, liabilities, spouse income, children's education, etc are also to be factored in.

Right now u can
go to this Page to calculate yr HLV from Bajaj Allianz. Another link is from Metlife Insurance

Also click on Insurance Industry to see a ppt on Insurance as an emerging industry.

Indian consumers have bought life insurance for reasons of tax saving rather than the core need of providing for one's family in case of death of breadwinner.
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