INDIVIDUAL INSURANCE
Human Life Value (HLV)
Human Life Value relates to a person’s worth. What is a person’s worth? What price for man? If your clone were up for sale what price would you be willing to pay for it? And why?
A person has several values: Emotional, Social, Religious, Spiritual, and Economic.
A person’s way of loving and caring for others as a friend, father, mother, brother, sister son, daughter, etc. can not be replaced. Neither can that person’s contributions to the growth and betterment of society by the way of special skills in the arts, profession, ability to generate employment… in short, all acts of making this world a better place to live in.
What can be replaced is a person’s income earning capacity, the amount he/she earns for family members that is used to provide for all their needs and to create wealth for them as well as future generations.
So how do we measure a person’s economic value?
In simple layman’s terms, our insurance cover, to a great extent, determines our value. Let me explain. We insure our 2 wheeler say, for 80,000, our car, say, for Rs. 10 lakh, stocks for say, 20 lakh. Normally, we insure for a definite amount. Why? Because that’s what we feel it is worth. But we grossly under-estimate our life’s worth by insuring it for paltry sums. Though we create properties worth millions of rupees and know we could create a lot more in our earning life spans, the majority of us, (approximately 97%) insure ourselves for a paltry amount of say, between 2 and 10 lakh. Are we worth only that much?
If a goose laid golden eggs and we insured the eggs for say, Rs. one crore, how much should we insure the goose for?
That’s the argument that should determine our HUMAN LIFE VALUE ……..
P.S. There IS a scientific way of calculating your human life value based on your present age and assumptions of your retirement age, your present income, rate of growth of your income, inflation rate, safe rate of return that your family can earn on investments, etc.
Retirement Planning
Insurance for retirement planning is a big area which is grossly unexploited till date in India. Worldwide it is one of the major reasons for which insurance is bought. Very few people realize that savings for retirement if started early can yield unbelieving results when compared to savings late in life.
- How the retirement life should be?
- At what Age would you like to retire?
- For living that kind of retirement life Rs.___ will be required every month & in Lump Sum Rs.____
- Are you sure that the said amount will be sufficient taking into consideration other requirements like: old age medical expenses, other expenses like children’s marriages, habits, hobbies etc.
- Is the Capital Guaranteed and is the return Tax Free?
Child’s Education & Marriage Planning
The increasing cost of education is a constant source of anxiety. Just imagine the cost of educating your child when s/ he grows up. If the thought scares you then, perhaps, this is the right time to start educating your child about how important money is and will become when s/ he grows up.
Like education it is the same story for children’s marriage expenses. If you as a parent feel that today your daughter’s marriage will cost you Rs 7,00,000 then the same marriage will cost Rs 11.27 Lacs 5 years down the line if expenses increases constanly.
