Human Life Value (HLV)

Insurance
Updated Apr 2026 • Has calculator

The present value of a person's future earning potential, used to estimate life insurance needs.

What is Human Life Value?

Human Life Value (HLV) is an insurance concept that calculates the present value of an individual's future earnings from now until retirement. It quantifies the financial loss a family would suffer if the primary earner died today. The calculation discounts projected annual income over the working years remaining using a chosen discount rate, providing a data-driven starting point for determining adequate life insurance coverage.

Formula

HLV = Annual Income × [(1 − (1 + r)^−n) / r]

Worked Example

Worked example — Hypothetical household

2026

Step 1  Annual income: $75,000
Step 2  Discount rate: 5%, Years to retirement: 25
Step 3  HLV = $75,000 × [(1 − 1.05^−25) / 0.05]
Step 4  HLV ≈ $75,000 × 14.094 ≈ $1,057,000
Step 5  → The household should consider at least $1.06M in coverage

Source: American College of Financial Services — Life Insurance Planning (2026-01-01)

Calculate Human Life Value

Gross annual income

Expected rate of return on invested assets

Years of earning remaining

Human Life Value

—

Not investment advice.

How to Interpret Human Life Value

< 250000
Modest Need — basic coverage may suffice
250000 – 750000
Moderate Need — standard term policy recommended
750000 – 2000000
Significant Need — consider a large term policy
> 2000000
High Need — permanent or layered policies advisable

📚 Insurance Planning — Complete the path

  1. Term Life Need
  2. Human Life Value
  3. Disability Need
  4. Health OOP Max
  5. LTC Cost
Sources
  1. American College of Financial Services
  2. Investopedia — Human Life Value