What Does Economic Value of an Individual Life (EVOIL) Mean?
The economic value of an individual life is the amount calculated from one's yearly income, the income one gets leading to retirement, and other variables (savings, assets,etc.) to determine the financial loss a family will suffer in the case of a family member's death. This calculation will help determine the amount of insurance that a person qualifies to receive.
Insuranceopedia Explains Economic Value of an Individual Life (EVOIL)
The death of an income provider in the family economically affects the entire household. To protect them from economic devastation, a member, specifically the breadwinner, gets an insurance policy that is determined from the amount of money that is lost if he or she dies. This is arrived at by computing the annual income, the projected generated income until retirement, and other factors such as savings and assets.
While this is one method of knowing how much insurance a person should get, there is also another method which, perhaps, is more versatile because it also absorbs the financial effects of death. This method is called the needs analysis approach. To put it simply, this method calculates the expenses a family needs in the future. This includes, but is not limited to, education, legal fees, child care, other possible household obligations, and loss of income due to an employed family member's death.