Human Life Value

How do you determine human life value?  It sounds like a cold and insensitive position however, in the insurance world a human life value is placed upon each life insurance candidate.  This is to determine how much life insurance coverage a person should obtain based on several factors that will be discussed this week.  The human life value is also used to assist in determining the premium for the life insurance applicant.  Having not enough life insurance coverage can be just as devastating as leaving your family with no financial security.  The following are three scenarios that provide an educated calculation the human life value of each life, in each scenario. 

Jeff is 25 years of age and works as an auto mechanic.  Jeff’s annual gross income is $40,000 per years with some benefits.  Jeff is married to Teresa who is 23 years of age.  Teresa earns $15,000 per year working part-time in a grocery store.  Jeff and Teresa both plan to retire at age 65.  At this time, Jeff and Teresa do not plan on having any children.  If Jeff should tragically pass away today, and the unexpected DOES happen, his human life value is $2,018,653.00.  This human life value is based on total projected earnings minus taxes and consumption.  Jeff would require over $2 million in life insurance should he pass suddenly today to be able to provide for his wife. 

Let’s look at a similar scenario but in reverse where the wife is the primary contributor to the family.  What do you think her human life value will be?  For this scenario we used a female school teacher who earns the same wage as above, $40,000 gross income a year.  Susan, the 30 year old teacher is married to Mike who makes $15,000 per year in gross wages from the gas station.  Susan plans to work to age 65, as well as Mike.  LIFE’s human life value calculator showed Susan’s human life value to be $1,992,136.  As an act of love, Susan purchased a life plan for Mike that covers $2 million.  Susan understands that “Life Happens.”

Here is a completely different scenario.  A scenario where life insurance purchased for your spouse is truly an act of love.  Jessica is a 38 year old surgical nurse who makes a better than average gross wage of $54,000 per year.  Three years ago Jessica lost her husband and father of four children less than ten years of age.  Jessica’s husband John had only a $15,000 through his place of employment.  This money didn’t last long.  Jessica learned the hard way about life insurance and wants to provide for her children in case “Life Happens.  What is Jessica’s human life value?  How much should she purchase to ensure financial well-being for her four children?  With four children between the ages of 9 and 3 years and making $54,000 in gross annual wages; Jessica’s human life value is $1,866,993.  If we added a spouse back into the equation, Jessica’s human life value is $1,927,693. 

Were you as surprised at the very little difference in amount of human life value when children are added into the equation?  LIFE’s human life calculator is just a tool to get an idea of how much life coverage you should purchase. Your agent can assist you with the specific coverage you require.  These examples are to educate people in how much your life is actually worth.  It is worth quite a bit more than you thought, as I am guessing.