How much Insurance Coverage do I need? – HLV

(Last Updated On: April 27, 2019)

Often when someone comes across the question – How much Insurance Coverage do I need? – the general tendency is to think that I have enough Insurance Coverage. Some may go a little further and may end up saying, “I don’t want any insurance.” Some will also think that Insurance is not a profitable investment.

These are physically different answers but if you go a little deep, it is easy to understand that the core of all these answers points to a simple problem. “I don’t know how much insurance I need.”


In vehicle insurance or general insurance, it is easy to calculate the actual value of the material to be insured and decide the face value of insurance coverage. It is not that easy to calculate the value of human beings in Life Insurance, to find out the optimum insurance requirement.

The best method to find out the required insurance coverage is based on the Human Life Value concept(HLV), developed by Dr. S. S. Huebner. Human Life Value (HLV) concept follows the Income-replacement theory. Whatever income which is used to support the family has to be replaced through Life Insurance.

How much Insurance coverage do you need?

For Example, Let us calculate the Insurance Coverage required for Mr. Arun having an age of 32 years. His expected retirement age is 60 years. Let his current monthly income be Rs. 30000. Let us assume that the total personal expenses of Arun are to the tune of Rs. 5000. Let the bank interest rate be 8% and the assumed inflation rate is 4%.


Amount going to the family every month is arrived by finding the difference between the Income and Personal expense and will be equal to Rs. 25000 per month. While taking account of 4% inflation the income need to be replaced comes to Rs. 2,51,89,108. The current value of this amount based on 8 % interest is calculated and from that, we can find the insurance coverage required is coming to 30 lakhs.

Answer to the question, “How much Insurance coverage do you need?”- varies based on Age, Income, Personal Expenses, Retirement Age, Prevailing Interest Rate, Inflation Rate, etc.


Calculate your insurance coverage requirement using The Human Life Value calculator provided at Insurance Funda.

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