Whenever we think of any investment or securing our lives through Life Insurance or any other similar financial instrument, the Sum Assured is taken as the base. Many of you are now-a-days opting for Term Insurance. But how do u come to know how much is enough or sufficient for my Family.
The solution is given by Prof. Solomon Huber. Today the entire world follows his principle and formula for calculating human value.
Prof. Hubner was a Mathematician and a Statistics expert. He had a Maid working in his house for a very Long time. Her Husband was working in a Mining Company situated in the outskirts of the city. Both, the maid and her Husband were really working hard for their own living and for their Children. On one Unfortunate day, the Husband of the maid met with an accident at the mining site and passed away.
The Owner of the Mining Company gave a nominal amount of few Dollars to the maid as a compensation. The maid, as she was not very much aware about investments, she gave the entire amount to Prof. Hubner and requested him to save the same for her future. She would take it from him whenever she requires the amount.
When Prof. Hubner saw the amount, he was very disappointed and thought how can she take care of herself and her children for the rest of the life with this small amount.
This was the time when Prof. Hubner thought about having a formula for calculating Human value. The calculation should be such that the family can take care of themselves.
Prof. Hubner derived the formula where the following parameters were considered.
- Estimating Annual Income: This includes salary, other earnings and also potential future earing (which he would have earned, if he was alive)
- Subtracting Personal Expenses
- Number of years Remaining for retirement
- Calculating the present value of the Future Income 9 Inflation to be considered
All the above factors should be considered while calculating Human Life Value. Normally it should be 20 to 30 times of your present Income.
You should always consult a Financial advisor for calculating your Human Life Value, before making any investments or buying an Insurance policy.
When you go ONLINE to buy any Financial product, they will never give you proper guidance on human Life value. So always Trust your Personal Financial advisor
