FinTech Glossary

What Is the Human Life Approach

The human life approach is a method used in insurance and financial planning to estimate the economic value of a person’s life. It calculates the financial loss a family or dependents would face due to the loss of that person’s future income.

Insurance Planning Context

The human life approach is most commonly used to determine life insurance coverage requirements.

It focuses on the income-earning potential of an individual and the financial support they provide to dependents over their working life.

Rather than emotional or moral value, this approach measures the financial contribution a person would have made.

How the Human Life Approach Works

Under this approach, the value of a person’s life is calculated based on expected future earnings.

From this amount, personal living expenses and taxes are deducted to estimate the net financial contribution to dependents.

Key factors considered include age, income level, career growth, working years remaining, and family responsibilities.