🛡️ Insurance Needs
Life cover via Human Life Value and needs-based methods.
This estimates how much life insurance cover you actually need, using two established methods: Human Life Value (income-replacement based) and a needs-based approach (covering specific future liabilities).
Human Life Value estimates the present value of your future income stream that dependents would lose, discounted back at an appropriate rate. The needs-based method instead adds up specific obligations — outstanding loans, children's education costs, a replacement corpus for ongoing expenses — to arrive at a required cover amount. The calculator recommends the higher of the two, since each approach sheds light on a different risk.
Someone earning 12,00,000/year with 20 working years left might show a Human Life Value of roughly 1,20,00,000–1,50,00,000, while a needs-based calculation adding a 40,00,000 home loan, 30,00,000 for children's education, and a 50,00,000 expense-replacement fund arrives at a similar but independently-derived number.
Relying on employer-provided group insurance alone is a common and risky gap — that cover is usually far below what a needs-based calculation would suggest, and it typically ends when employment does.
What it does
Estimates the life cover your family would need, using two independent methods — Human Life Value and a needs/liability check — and recommends the higher.
When to use it
Use it when buying term insurance, reviewing cover after a salary jump or a new loan, or when you have dependents who rely on your income.
Assumptions
- Future earnings grow at the income growth rate and are discounted back at the discount rate (Human Life Value).
- Dependents need a fixed annual expense for a set number of years.
- Existing assets and existing cover reduce the gap.
Buy the recommended amount as pure term insurance — it is the cheapest way to cover a large risk, and you should never mix insurance with investment products. Re-run this whenever your income, liabilities, or family situation changes.