Free tool
Human Life Value Calculator
What your working years are worth to the people who rely on you.
Human life value
$916,084
What 25 years of your work are worth to your family today.
- You bring home for the familyThis year, after tax and personal costs
- $48,000
- Working years left
- 25
- All those years added upBefore discounting
- $1,750,045
- Human life valueDiscounted at 5%
- $916,084
Insurers use versions of this figure to judge how much cover makes financial sense. Workplace benefits and retirement savings are left out.
Every payday, part of what you earn keeps your family going. This free InsureCard calculator adds up that part for every year until you retire, with pay rises, and turns it into one figure in today's money: your human life value, the most life cover that makes financial sense.
Updated
The formula
Contribution in year 1 = Income × (1 − tax − personal costs)
Human life value = Σ Contribution × (1 + g)^(t − 1) ÷ (1 + r)^t, for t = 1 to years to retirement
Personal costs are what you spend on yourself, which your family would not need to replace. g is how fast your pay rises each year; r is the discount rate, what a lump sum could earn if invested.
Discounting turns each future year into today's money. A higher discount rate gives a lower value; faster pay rises give a higher one.
A worked example: $80,000 a year at 40
A 40-year-old earns $80,000 and plans to retire at 65. After 15% tax and 25% spent on themselves, they bring $48,000 a year home for the family.
With pay rising 3% a year, the 25 years add up to $1,750,045. Discounted at 5%, that is a human life value of $916,084.
How is it different from the DIME method?
DIME asks what your family would need to pay for. Human life value asks what your earning power is worth. One starts from bills, the other from your paycheck.
Run both. If the needs figure is far below your human life value, you have room to add cover; if it is above, look at the costs you entered.
Choosing the pay rise and discount rate
For pay rises, the Social Security Administration publishes the National Average Wage Index each year, which shows how average US pay has grown. Your own field may run faster or slower.
For the discount rate, use a cautious return your family could expect from a safe mix of investments. Try two rates to see how much the answer moves.
Questions
What is human life value in life insurance?
It is the present value of the income you would bring your family until you retire, after tax and your own costs. Insurers use a version of it to judge how much cover makes financial sense for someone your age and income.
Can I buy cover for my full human life value?
Often, if your health and finances support it. Insurers set their own limits by age and income, so ask an agent what the carriers they represent would consider for you.
Does it include a stay-at-home parent?
Not directly, since it starts from pay. For a parent at home, add up what childcare, cooking and running the home would cost to replace, and use the Life Insurance Needs Calculator instead.