Key Person Insurance Calculator

The Key Person Insurance Calculator recommends a coverage amount by taking the larger of two independent estimates: a revenue-impact-and-replacement-cost figure, and a flat industry benchmark of 5 times the key person's salary. The benchmark, Salary Multiple, is driven entirely by Key Person Annual Salary -- raising it raises both the benchmark and, because Recommended Coverage takes the larger of the two figures, the final recommendation, provided the benchmark stays the larger of the two (which it does at this calculator's default inputs). Revenue Attributed to Key Person is Company Annual Revenue times Revenue Attribution -- the share of company revenue this person is estimated to personally drive -- and raising either input raises that attributed figure. Lost Revenue During Transition scales Attributed Revenue by how many months (out of 12) a replacement needs to reach full productivity, so a longer Transition Period raises the estimated revenue lost while the business is short-handed.

Outstanding Business Loans and the recruitment/training figures feed the revenue-impact estimate but never touch Attributed Revenue itself, since that figure is purely a function of company revenue and the attribution percentage. What this does not account for: the key person's specific skills or relationships being genuinely irreplaceable at any price, existing coverage the business already carries, or the fact that the 5x-salary industry benchmark is a rule of thumb, not a formula tied to your business's actual risk profile -- insurers underwrite key person policies case by case. Estimated Annual Premium applies a flat 0.5%-of-coverage rate (roughly $5 per $1,000 of Recommended Coverage) to approximate a term policy's annual cost -- a simplified planning figure, not a quote, since real premiums vary with the key person's age, health, and the insurer's underwriting.