Present value of your future after-tax earnings.
Human life value
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After-tax income now
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Working years left
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Putting a number on your earning power
If you were not here tomorrow, what would your family lose in pure financial terms? Not your savings or your house, but the stream of income you would have brought home over the rest of your working life. Human life value is the actuarial answer to that question, and it is the cleanest starting point for deciding how much life cover to buy. The logic is straightforward: take what you earn after tax, project it forward to retirement with realistic raises, then pull every future year back to today's money. The sum is the lump sum that, invested sensibly, could stand in for your salary.
This tool runs that calculation with one Pakistan-specific refinement. It does not use your gross salary, it uses your after-tax income, because your family lives on what survives the FBR, not on the headline figure. It computes the tax once on your current income using the salaried slab rates and the high-income surcharge structure, both of which the Finance Act resets each June, so confirm the live figures with the FBR. The after-tax base is then grown and discounted year by year.
The two rates that decide the answer
Two inputs do most of the heavy lifting, and they pull in opposite directions. The growth rate is how fast you expect your income to rise, which inflates each future year. The discount rate is the return you assume the lump sum could earn, which shrinks distant years back to present value. A wide gap between them, say strong raises and a modest discount rate, produces a large human life value. A narrow gap produces a smaller one. The default here uses 8 percent growth against an 11 percent discount, a deliberately conservative spread that keeps the figure grounded.
A 35-year-old on PKR 3 million, worked through
Start with PKR 3,000,000 of annual income. The salaried slab rates this calculator applies give a tax of PKR 300,000, so the after-tax base is PKR 2,700,000. With retirement at 60, that is 25 working years left. Each year the base grows 8 percent, and each year is discounted 11 percent back to today. The first handful of years look like this, with the running present value building up.
| Year | After-tax income that year (PKR) | Value today (PKR) | Running present value (PKR) |
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The total comes to PKR 44,630,716, which the tool rounds and shows as Rs 44,630,716, or roughly PKR 44.6 million. Notice how each year contributes a little less in today's money than the one before, even as the raw salary grows, because discounting bites harder the further out you go. That declining curve is the heart of the method, and the chart below shows it for the first ten years.
The chart in the calculator above shows how the present value of each year declines over time as discounting outpaces the growth rate.
Reading the result like a planner, not a salesperson
A figure near PKR 44.6 million is a ceiling, not a prescription. Human life value tends to run higher than income-replacement methods because it values your entire future earnings, ignoring that some of that income would have gone to your own living costs and to taxes you no longer trigger once you are gone. A common mistake is to buy cover for the full human life value and over-insure. The smarter move is to treat this as the upper bound, then subtract existing assets, any spouse income, and the share of income that was only ever spent on you. An edge case to watch: if you set retirement age equal to your current age, working years are zero and the value collapses to nothing, which is the maths telling you there is no future income left to protect.
The tool is built for a salaried earner with a fairly predictable career arc. It is less suited to someone with lumpy, unpredictable business income, since a single year's tax figure cannot capture that volatility. If your income swings, run the calculation a few times across a realistic range of earnings rather than trusting one snapshot.
How is human life value different from the DIME method?
DIME adds up specific obligations, namely Debt, Income replacement for a set number of years, Mortgage, and Education costs, and is essentially a needs-based total. Human life value instead capitalises your entire remaining earning power regardless of specific debts. HLV usually gives a larger number. Many planners compute both and choose cover somewhere between them.
Should I use a higher discount rate in Pakistan?
It depends on what return you genuinely expect a lump sum to earn after tax and inflation, not the headline policy rate. A higher discount rate lowers the human life value because future income is worth less today. The default 11 percent here is a reasonable middle ground, but if you would invest conservatively, a lower rate that pushes the value up may be more honest. Run both and see the spread.
Does this include inflation?
Indirectly. The growth rate you enter should reflect nominal salary increases, which already carry inflation, and the discount rate is also nominal. As long as you keep both on the same basis, the comparison holds. Mixing a real growth rate with a nominal discount rate, or the reverse, is the usual error that throws the answer off.