The 2018 Level 3 Mock Exam PM contains a question asking to calculate the HLVM (Human life value method), I believe this LOS has been removed, because I’m studying using Schweser Notes and I did not come across this concept.
can anyone please confirm that?
Is this concept related to Human Capital?
Schweser gave a live mock two weeks ago and this question was on the exam.
Human life value method = replacing person’s human capital with insurance benefits.
I see it in my copy of the 2018 Level III curriculum.
Thanks, I’ll have to check it directly in the curriculum, because I could not find it in Schweser notes (a first) !!
It’s in the curriculum, but the LOS for it only says “analyze”, not “calculate”.
Can an “analyze” LOS really have us doing full-bore monster calculations like this, to get an exact figure? That sounds like “calculate” to me.
I recall seeing it in the CFAI text.
But look at all the calculations involved…if it does appear on the exam, I would just guess something and move on.
As learning with Schweser this is also new to me. I think I understand the concept from the answer provided but when we have calculated the insurance amount required as 1701345 why do we not need to back out the taxes “on income earned on insurance proceeds” that are given at 20%?
Are life insurance receipts assumed not to be taxed? What is this tax rate then for?
Death benefit proceeds are typically tax-free in the hands of the beneficiary. If the beneficiary leaves the money on deposit with the insurer, any interest earned is then taxed.
I’d have to see what is going on with Schweser’s example to see if this is being applied.
Thanks. Also found a comment by now that death benefits are tax free.
Overall still a question I would rather not see on the exam