What is your human life value?
The older way of sizing life cover: treat your future earnings as a stream of money, work out what that stream is worth today, and subtract what already exists.
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The formula is written out in full below and can be done on paper. It is future annual income, discounted back to today at a rate you choose, less the cover you already hold.
Your human life value, on these assumptions
—
| Working years remaining | — |
|---|---|
| Value of future earnings today | — |
| Less cover already held | — |
| Human life value | — |
Worth noticing
This is an estimate based on the figures you entered. It is not a quotation, and it does not reflect any insurer's product terms or pricing. What a policy actually costs is set by the insurer at underwriting.
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How this is worked out
Human life value treats your earnings as a stream of future money and asks what that stream is worth today. Money arriving in twenty years is worth less than money arriving now, so each future year is discounted back.
The formula, in full:
HLV = annual income × [ 1 − (1 + r)−n ] ÷ r − existing cover
where r is the discount rate you entered and n is the number of working years left. The bracketed part is the standard present-value factor for a level annual amount.
The discount rate does most of the work. Raise it and the answer falls sharply, because distant earnings are being valued less. That is why it is an input here and not a number this site picks for you — a calculator that chooses the rate is really choosing the answer.
This method takes no account of what you owe or what you want funded. The needs-based method does, and most people find it more useful.
Questions people ask
How is this different from the needs-based method?
This one values what you would have earned. The needs-based method adds up what your family would actually have to deal with — income to replace, debts to clear, goals to fund, less what exists. They answer different questions and routinely produce different numbers.
What discount rate should I use?
That is your assumption to make, which is why it is an input. A higher rate produces a lower value, because it assumes money invested today grows faster and so less is needed. Try it at a few rates — the spread will tell you how much the answer depends on the guess.
Should I deduct my own living costs from income?
The stricter version of this method does, on the reasoning that your family would not need to replace what you spent on yourself. It produces a smaller figure. Either is defensible as long as you know which you did.
Is a bigger number better?
No. It is an estimate of economic value, not a target. An insurer also caps cover as a multiple of income, so a very large human life value may sit above what would actually be issued.
Related reading
- How much cover do I need — the needs-based method, which most people find more useful.
- What happens after you apply — including why cover is capped against income.
- Term insurance — the category built for replacing income.
Last reviewed: 31 August 2026