Calculate the Right Life Insurance Cover - PowerPoint PPT Presentation

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Calculate the Right Life Insurance Cover

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Bajaj Allianz is an insurance company dealing with Term Insurance, Car Insurance, Health Insurance, Travel Insurance and Child Insurance Plan. – PowerPoint PPT presentation

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Title: Calculate the Right Life Insurance Cover


1
Calculate the Right Life Insurance Cover
Get the right life insurance cover in 3 steps!
2
Human Life Value
The HLV figure you arrive at should help you make
a reasonably accurate assumption of the value of
your income.
  • The Human Life Value (HLV) approach to
    calculating life insurance requirements accounts
    for 4 factors
  • Annual income
  • Annual expenses
  • Number of years to retirement
  • Inflation-adjusted cost of expenses

3
Step I
  • Your Annual Income salarybonusemployee
    benefitsincome from investments.
  • Deduct your personal expenses (food, clothes,
    travel, etc) from the above.
  • What is left, is what your family consumes per
    annum.

4
Step II
The shortfall of the below mentioned expenses is
the amount that you should insure yourself for.
  • See how many years are left till you retire.
  • Project family expenses upto retirement,
    allowing for reasonable increments.
  • Subtract any pension benefits your family gets
    upon your death.
  • Add non-recurring expenses, like your childrens
    higher education.

5
Step III
  • Calculate the shortfalls present value,
    allowing for a reasonable rate of inflation.
  • Factor in your existing investments by deducting
    your net worth and accounting for any big-ticket
    loans, to arrive at a reasonable HLV figure.

6
Know Your Life Cover Needs
  • The HLV figure you arrive at should help you
    ascertain the amount of life insurance cover you
    need.
  • Since HLV is a moving target, keep reviewing it
    every 5 years, at the least.

7
Thank You
Get the right life insurance cover in 3 steps!
8
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