Page 19 - IC24 LEGAL ASPECTS OF LIFE ASSURANCE
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same financial position that he enjoyed before the occurrence of
the event due to which he suffered a loss.
Human life value is used as a yardstick to calculate the amount
of life insurance an individual should buy.
Methods of calculating HLV includes income replacement
method, needs analysis method and income multiple method.
The income replacement method takes into account the present
value of future potential earnings of an individual for arriving at
the amount of insurance cover that an individual should take.
The need based method takes into account financial liabilities
and the financial responsibilities for arriving at the amount of
insurance cover an individual should take.
The income multiple method takes into account the age, salary
and multiple of salary of the individual for arriving at the amount
of insurance cover that an individual should take.
