What does the Human Value Approach in insurance evaluate?

The Human Value Approach in insurance focuses on assessing the monetary value of an individual's future income and potential contributions to their family or dependents in the event of their untimely death. This method emphasizes the life insurance needs by examining the present salary of the insured individual, projecting it into the future, and calculating the financial impact their loss would have on their dependents. By doing so, it aims to provide a more personalized and relevant insurance coverage amount, ensuring that the financial stability of the surviving family members is maintained.

This approach contrasts with broader economic factors or company valuations, as it is specifically tailored to the individual's income and the associated financial responsibilities they carry. It becomes clear that understanding an individual's current salary directly correlates to determining how much life insurance is needed to protect their family's financial future.