Question

How is Human Life Value (HLV) calculated using a simple thumb rule?

a.

HLV is calculated by multiplying the annual income by the number of years a person is expected to work.

b.

HLV is calculated by dividing the annual income by the prevailing rate of interest.

c.

HLV is calculated by adding the annual income to the amount spent on oneself.

d.

HLV is calculated by subtracting the annual income from the amount spent on oneself.

Posted under L01 What Life Insurance Involves IC38 Life Insurance Agent Exam

Answer: (b).HLV is calculated by dividing the annual income by the prevailing rate of interest. Explanation:HLV is calculated by dividing the annual contribution for dependents by the prevailing rate of interest. It represents the amount that would generate the annual income the family would need by way of interest.

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