Human Life Value: The Foundation of True Wealth and Economic Stability
“Human life values, as reflected by current earning power, constitute an economic asset as much as tangible property does. The money value of nation’s life value exceeds by many times the aggregate total of its material wealth.”
“It is human life values that cause property to have value. If It were not life value, there would be no property value.”
These words were written by late Solomon S. Huebner, Ph.D., former president of The American College – a man generally regarded as the dean of university insurance professors.
The idea that the “money worth of the nation’s life value exceeds by many times the aggregate total of its material wealth” highlights the immense value of human potential, creativity, and life itself compared to the physical assets or material wealth of a country. Here’s an illustration with examples:
- Human Capital vs. Material Wealth
Example:
– A diamond mine is valued for its gems, but without skilled workers, engineers, and planners, the diamonds would remain buried forever. The workers’ expertise and effort add value far beyond the diamonds’ market worth.
– In Japan, a country with limited natural resources, innovation and human skill have transformed it into an economic powerhouse, proving that human potential is far more valuable than material wealth alone.
- Health Systems
Example:
– A nation’s GDP may reflect its economic success, but during the COVID-19 pandemic, it became evident that a country’s ability to protect its citizens’ lives through robust healthcare systems was of utmost importance. Lives saved far outweigh any monetary losses from temporary economic slowdowns.
- Education and Knowledge
Example:
– Nations like South Korea, which invested heavily in education, have seen a transformation in their economy. The innovation driven by educated minds has created industries and technologies that surpassed the monetary worth of raw materials.
– Let us consider the story of the Indian mathematician Srinivasa Ramanujan: His contribution to mathematics has an incalculable worth, far exceeding any material wealth at the time.
- Inspiration from Leaders and Thinkers
Example:
– Leaders like Mahatma Gandhi, Martin Luther King Jr., and Nelson Mandela changed the course of history with their ideologies, inspiring millions to act for justice, peace, and equality. Their value to humanity cannot be quantified in monetary terms, unlike a nation’s treasury.
- Cultural and Emotional Value
Example:
– Let us consider the Eiffel Tower in Paris: While its material cost is measurable, its cultural and emotional worth, drawing millions of visitors and symbolizing French heritage, is immeasurable.
– Similarly, India’s Taj Mahal has a monetary construction cost, but its symbolic representation of love and cultural pride far surpasses its material value.
Conclusion
The true worth of a nation lies in its people, their creativity, resilience, and values. Material wealth is finite and depreciates over time, but the life value of a nation—the collective potential, spirit, and ingenuity of its people—is infinite, timeless, and truly invaluable.
The statement that “the money worth of the nation’s life value exceeds by many times the aggregate total of its material wealth” aligns deeply with the principles of life insurance, as articulated by Dr. Solomon S. Huebner, the “Father of Life Insurance.” Dr. Huebner emphasized that the economic value of human life far surpasses tangible assets because it is the foundation upon which a nation’s wealth is built. Here’s how this perspective can be illustrated in the context of life insurance:
- Human Life Value (HLV) and Its Worth
Dr. Huebner introduced the concept of Human Life Value (HLV), which quantifies the economic worth of a person’s life in terms of their earning capacity, future potential, and contribution to society.
Example: A skilled professional earning ₹20 lakhs per year and expected to work for 20 more years has a life value of ₹4 crores (₹20 lakhs x 20 years), excluding inflation and growth. This figure dwarfs any material assets they may own.
– Life insurance recognizes and protects this value, ensuring that in the event of an untimely death, the family or dependents are not deprived of this economic potential.
- The Nation’s Wealth is Rooted in Its People
A nation’s economy thrives on the productivity, creativity, and innovation of its citizens. When people are adequately insured, their families can sustain themselves and contribute to the economy, safeguarding national progress.
Example: In a household where the breadwinner is lost, life insurance prevents the family’s descent into poverty, ensuring children can continue their education, businesses can stay operational, and societal burdens are reduced. This ripple effect underscores the life value of individuals in sustaining a nation’s economic fabric.
- Huebner’s Perspective on Legacy and Responsibility
Dr. Huebner emphasized that life insurance is not just about monetary compensation but about protecting human dignity and economic independence.
Example: A farmer may own land worth ₹50 lakhs, but the value they generate over decades of farming far exceeds the land’s worth. Life insurance ensures that even if the farmer is no longer there, their family can continue the legacy without financial struggles.
- Life Insurance as a Catalyst for National Development
Dr. Huebner believed life insurance contributes to a nation’s economic stability by mobilizing savings and creating a safety net for families. It provides capital for national development and safeguards against the financial impact of untimely deaths.
Example: During the Great Depression, life insurance companies in the U.S. played a crucial role in stabilizing the economy by providing financial payouts to families and investing in infrastructure and industries. This highlights the multiplier effect of safeguarding human life value.
- The Intangibles of Life Value
While material wealth can be measured, the value of a person’s love, leadership, and emotional support cannot. Life insurance recognizes this through its promise to ensure financial continuity even when such intangibles are lost.
Example: A parent not only provides income but also guidance, motivation, and security for their children. Life insurance cannot replace the emotional loss but can ensure that their aspirations for the family are fulfilled.
Conclusion
Dr. Solomon S. Huebner’s teachings highlight that the true wealth of a nation lies in its people and their life potential. Life insurance acts as a bridge between this immense life value and its economic preservation. By protecting human life value, life insurance not only secures families but also strengthens the nation’s economic foundation, ensuring progress and prosperity for future generations.
The statement “It is human life values that cause property to have value. If it were not for life value, there would be no property value” resonates deeply with the philosophy of Solomon S. Huebner and the principles of life insurance. This concept highlights how human life, with its creativity, productivity, and aspirations, is the source of all value attributed to material wealth. Let’s break it down with examples and reasoning:
- Human Life Value Gives Property Its Purpose
Without human beings to assign meaning or utility to property, it would merely be inert matter. Human life value transforms raw materials into assets of economic or emotional significance.
Example: A plot of land in a deserted area has no inherent value. Its worth emerges when humans cultivate it into farmland, develop infrastructure, or use it for habitation. The same land would be considered priceless if it became the foundation for a thriving city or community.
Life Insurance Context: Life insurance protects the human life value that makes these properties valuable. In the event of a death, life insurance ensures continuity by providing funds for dependents to maintain or enhance the property’s value.
- Properties Derive Value from Human Utility
All properties—whether homes, businesses, or resources—gain value only because they serve human needs or wants. If there were no human lives, there would be no demand, and therefore no value, for any property.
Example: A factory holds no economic worth if there are no workers to operate it, no entrepreneurs to manage it, and no consumers to purchase its goods. Human life value drives its functionality and profitability.
Life Insurance Context: Life insurance safeguards the continuity of this cycle. If the owner or key personnel of a factory passes away, insurance can fund business operations and secure employees’ livelihoods, sustaining the property’s value.
- Human Vision Creates Wealth from Property
It is human ingenuity and labor that transform raw resources into valuable property. Without human vision, property remains dormant.
Example: Crude oil was once just a sticky substance in the ground until humans discovered its potential as fuel. Human innovation gave it immense economic value.
Life Insurance Context: By protecting the financial security of inventors, workers, and investors, life insurance ensures that human ingenuity continues to flourish and create value from property.
- Emotional Value Tied to Property
Beyond economic worth, human life also gives emotional and sentimental value to property.
Example: A family home is often valued far beyond its market price because it holds memories, emotions, and the legacy of those who lived there. If the family’s breadwinner passes away, life insurance ensures that this emotionally significant property can remain within the family.
- National and Economic Perspective
On a macroeconomic level, nations thrive because their citizens’ productivity creates wealth. Properties, infrastructure, and resources are valuable only because of their utility to people.
Example: Skyscrapers, ports, and roads derive their worth from the people who use them for commerce, transport, or living. Without human life, these structures would become relics.
Life Insurance Context: Dr. Huebner emphasized how life insurance protects the foundational human life value that drives a nation’s progress. By safeguarding families and businesses, it ensures that property retains its utility and worth.
Conclusion
Human life value is the cornerstone of all property value. It is the creative, productive, and emotional essence of people that transforms physical matter into assets of worth. Life insurance plays a pivotal role in preserving this value, ensuring that human contributions to property and wealth continue unimpeded even in the face of life’s uncertainties. As Dr. Huebner might say, protecting human life value is the highest economic priority, for without it, all material wealth becomes meaningless.
The statement “Nine-tenths of the average estate consists of the life value as compared with merely one-tenth for the so-called property portion” perfectly encapsulates the principles of Dr. Solomon S. Huebner’s teachings. It emphasizes that the majority of a person’s economic contribution stems from their earning potential, productivity, and the financial security they provide to their dependents, rather than the physical or material assets they accumulate.
- Understanding the Ratio (9:1)
This ratio highlights that the majority of an individual’s economic worth is tied to their human life value (HLV)—their capacity to earn income, build a legacy, and support others. The property or tangible assets they own (land, homes, savings, etc.) often pale in comparison to this value.
Example:
A young professional earning ₹12 lakhs annually, with 30 years of active work life ahead, contributes a potential ₹3.6 crores in income over their lifetime (excluding raises and bonuses).
Now, compare this to the assets they own:
– ₹50 lakhs for a house.
– ₹10 lakhs in savings.
Their life value of ₹3.6 crores is far greater than their property value of ₹60 lakhs.
- The Role of Life Insurance
Life insurance bridges the gap between these two components by monetizing the life value and ensuring that dependents are not left vulnerable if the earning capacity is cut short due to an untimely death.
Example:
Consider a family whose breadwinner contributes ₹1 crore in annual earnings but owns ₹10 lakhs worth of property. If the breadwinner passes away without insurance, the family would lose 90% of their financial stability. Life insurance ensures that the 90% tied to human life value is protected.
- Life Value Drives Property Accumulation
Human life value is the engine that allows for the accumulation of property value over time. Tangible assets are the by-products of productive human effort.
Example:
A farmer starts with a small piece of land but through years of hard work and expertise, increases its yield and value. Without the farmer’s life value, the land would remain underutilized and less valuable.
– In the context of estate planning, the farmer’s property (land) would constitute a fraction of their life value (the income and prosperity they generated through their labor).
- Life Insurance as Estate Equalizer
Life insurance allows individuals to replace the larger, intangible portion of their estate (the life value) in the event of premature death. It ensures continuity for dependents who rely on this value for their survival and growth.
Example:
A business owner with a modest property portfolio might have significant life value due to their entrepreneurial efforts. If they pass away unexpectedly, life insurance provides their family or business with the financial resources to sustain operations and maintain property value.
- Historical and Practical Evidence
Dr. Huebner’s studies demonstrated that in most estates, tangible assets such as houses, cars, or savings often represent a small fraction of the economic potential generated by the deceased during their lifetime. This insight underscores the critical need for life insurance.
Example:
During the early 20th century, many families faced financial ruin after losing their breadwinners because their estates relied heavily on life value. Modern life insurance products were developed to address this gap, ensuring that families could maintain their standard of living even after losing the primary income earner.
Conclusion
The disproportionate ratio between life value and property value illustrates the immense importance of protecting human earning potential. Life insurance is the only financial tool that effectively secures the dominant portion of an individual’s estate—their life value—and ensures that their family or dependents are safeguarded against economic instability. As Dr. Huebner would advocate, “Protect the 90% (life value), and the 10% (property) will take care of itself.”