Life · Chapter 10 · Amount of Coverage
Human Life Value Approach (HLV)
Definition
Determines coverage by expressing a person's life as a dollar value: the present value of future net earnings devoted to the family (gross income − taxes − personal expenses), multiplied by the years remaining until retirement, discounted at a reasonable interest rate.
In plain English
"If this paycheck disappeared today, how many dollars of future family support die with it?" Replace the worker's economic value — nothing more.
Example
To provide $50,000/year for 30 years at 4% interest ≈ $864,602 of capital.
Exam tip
HLV counts ONLY lost income. It ignores the family's actual needs, goals, and existing assets — that's the needs approach's job. You don't need to memorize the formula, just what each approach considers.
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
Related terms