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Human life value: the economist's way to size coverage
Human life value prices your future earnings in today's dollars. How the math works, a worked example, and why it's best used as a ceiling, not a target.
Human life value (HLV) is the present value of the income you are expected to earn for your family over the rest of your working life, after taxes and your own living costs. It answers "what is my earning power worth today?" rather than "what does my family need?", so it usually produces a bigger number than a needs-based method. That makes it most useful as a ceiling: the most coverage that makes economic sense, and roughly the logic insurers use to decide how much they will issue.
Where the idea comes from
The concept is credited to Solomon S. Huebner, an insurance professor at the Wharton School, according to the Insurance Hall of Fame. He argued that a breadwinner's earning capacity is a family's most valuable asset, worth insuring the way you would insure a house, and laid the idea out in his 1927 book The Economics of Life Insurance. The same year he founded The American College of Life Underwriters, which created the CLU designation.
The math is the same basic approach forensic economists use to estimate lost earnings in wrongful-death cases: project future income, subtract what the person would have spent on themselves, and discount the stream back to today.
How the calculation works
- Start with current earnings. Salary and bonus, plus the value of benefits such as an employer retirement match, if you want a fuller figure.
- Project raises. Pick an annual growth rate for your pay through retirement.
- Subtract taxes and personal consumption. What you would pay in taxes and spend on yourself never reaches your family. What remains is your net contribution.
- Count the working years left. Usually until your expected retirement age.
- Discount to today. Each future year's contribution is worth less than a dollar today, because a lump sum paid now can be invested. The discount rate is the return you assume that lump sum could earn.
Add up the discounted contributions and you have your HLV. The human life value calculator does steps 2 through 5 for you.
A worked example (hypothetical)
Say Jordan is 35, earns $75,000 and plans to work until 65, which leaves 30 years. Jordan expects 3% raises a year and figures that taxes and personal spending take 35% of pay, leaving a first-year contribution of $48,750 to the household.
Added up without discounting, 30 years of that growing contribution comes to about $2.32 million. Discounted to today at 5% a year, it is worth about $1.07 million. That is Jordan's human life value.
The answer depends heavily on the assumptions, especially the gap between the discount rate and the raise rate:
| Discount rate (raises held at 3%) | Jordan's HLV |
|---|---|
| 4% | About $1.23 million |
| 5% | About $1.07 million |
| 6% | About $938,000 |
A one-point change in the discount rate moves the result by $130,000 to $160,000. Use a rate your survivors could realistically earn after inflation and fees, not an optimistic market return, and don't assume raises you aren't confident of.
HLV vs needs-based methods
| Human life value | Needs-based (DIME, needs analysis) | |
|---|---|---|
| Question it answers | What your future earnings are worth | What your family would need to stay on track |
| Main inputs | Income, raises, years to retirement, discount rate | Debts, years of support, mortgage, college, savings, Social Security |
| Typical result | Higher, especially for younger earners | Lower, especially once savings and benefits are subtracted |
| Best use | A ceiling, and for high earners whose families would lose a lifetime of support | Choosing the amount you actually buy |
The difference comes from what each counts. HLV includes every working year, even years after the children are grown, and it ignores your savings and Social Security survivor benefits. A needs analysis, or the faster The DIME method for sizing life insurance, stops counting when the obligations stop and subtracts what your family already has.
HLV counting those later years isn't always a flaw. Your earnings in your 50s and 60s would have funded your spouse's retirement too. If your spouse would struggle to save for retirement alone, the HLV figure captures a loss that a "until the kids are 18" needs analysis misses.
How insurers use the same logic
Insurers won't sell unlimited coverage. In underwriting, they check that the death benefit approximates a real financial loss, and for personal coverage they usually express the limit as a multiple of income that shrinks with age, which is effectively a rough HLV. Securian Financial's published financial underwriting guidelines (revised January 2025), for example, allow:
- 35 times income at age 35 and under
- 30 times at 36 to 40, and 25 times at 41 to 50
- 20 times at 51 to 55, and 15 times at 56 to 60
- 10 times at 61 to 65, and 5 times at 66 to 70
Each insurer sets its own limits. Under that schedule, Jordan could apply for up to $2.625 million, well above the $1.07 million HLV, so most people never come near the ceiling. Those who do, usually high earners buying several policies at once, should expect to document income.
Where HLV falls short
- People without a paycheck. A stay-at-home parent's HLV in income terms is close to zero, yet losing them is expensive. Value that work by what it would cost to replace; see life insurance for stay-at-home parents.
- It ignores what you already have. Savings, existing coverage and Social Security survivor benefits all reduce what your family would actually need.
- It ignores specific goals and debts. A big mortgage or a child with lifelong needs doesn't show up unless you add it.
- It is assumption-driven. Small changes in raises, the consumption share or the discount rate swing the answer widely.
- It can be expensive to insure in full. Many families buy their needs-based figure and treat HLV as the upper bound.
Using HLV in practice
- Run your HLV in the human life value calculator.
- Run a needs-based estimate in the How much life insurance do I need?.
- Buy somewhere between the two: nearer the needs figure if budget is tight, nearer HLV if your spouse depends on your future earnings for retirement or you want a margin for inflation.
- Match the term length to the years the coverage needs to last with the How long a term do I need?.
For a full walk-through of the methods side by side, see How much life insurance do I need?.
Key takeaways
- Human life value is the present value of your future earnings after taxes and personal spending, through retirement.
- It usually exceeds a needs-based estimate, which makes it a sensible ceiling rather than an automatic target.
- The discount rate and raise assumptions drive the result; small changes move it by six figures.
- Insurers apply similar logic through age-based income multiples when deciding how much coverage they will issue.
- It doesn't work for non-earners such as stay-at-home parents, whose value is better measured by replacement cost.