Human Life Value Approach to Calculating an Insurance Need
Assumptions:
Age at Time of Insurance Purchase: 30
Initial Income: $27,000.00
Number of Years of Working Life: 40
Assume that Income Increases: 3.50% each year
Discount Rate of Interest [Int.] = 5.00%
Discount Factor Present Value
Age Duration Income at Rate Int. Future Income
30 1 $30,000.00 0.952380952 $28,571.43
31 2 $31,050.00 0.907029478 $28,163.27
32 3 $32,136.75 0.863837599 $27,760.93
33 4 $33,261.54 0.822702475 $27,364.35
34 5 $34,425.69 0.783526166 $26,973.43
35 6 $35,630.59 0.746215397 $26,588.09
36 7 $36,877.66 0.71068133 $26,208.26
37 8 $38,168.38 0.676839362 $25,833.86
38 9 $39,504.27 0.644608916 $25,464.81
39 10 $40,886.92 0.613913254 $25,101.02
40 11 $42,317.96 0.584679289 $24,742.44
41 12 $43,799.09 0.556837418 $24,388.97
42 13 $45,332.06 0.530321351 $24,040.56
43 14 $46,918.68 0.505067953 $23,697.12
44 15 $48,560.84 0.481017098 $23,358.59
45 16 $50,260.46 0.458111522 $23,024.90
46 17 $52,019.58 0.436296688 $22,695.97
47 18 $53,840.27 0.415520655 $22,371.74
48 19 $55,724.68 0.395733957 $22,052.15
49 20 $57,675.04 0.376889483 $21,737.12
50 21 $59,693.67 0.358942365 $21,426.59
51 22 $61,782.94 0.341849871 $21,120.49
52 23 $63,945.35 0.325571306 $20,818.77
53 24 $66,183.43 0.31006791 $20,521.36
54 25 $68,499.85 0.295302772 $20,228.20
55 26 $70,897.35 0.281240735 $19,939.22
56 27 $73,378.76 0.267848319 $19,654.38
57 28 $75,947.01 0.255093637 $19,373.60
58 29 $78,605.16 0.242946321 $19,096.83
59 30 $81,356.34 0.231377449 $18,824.02
60 31 $84,203.81 0.220359475 $18,555.11
61 32 $87,150.94 0.209866167 $18,290.03
62 33 $90,201.23 0.19987254 $18,028.75
63 34 $93,358.27 0.1903548 $17,771.19
64 35 $96,625.81 0.181290285 $17,517.32
65 36 $100,007.71 0.172657415 $17,267.07
Current Life Insurance Need: $808,571.95