Key Person Insurance Calculator
Calculate the appropriate coverage amount for key employee life insurance based on revenue impact and replacement costs.
Financial Disclaimer
This calculator is for educational purposes only and does not constitute financial advice. Results are estimates based on the inputs provided. Consult a qualified financial advisor before making investment or financial planning decisions.
Inputs
Results
Recommended Coverage
$750,000.00
≈ 18 Teslas
How to Use This Calculator
- Enter the key person's annual salary.
- Input the company's annual revenue and the percentage attributable to this person.
- Enter the estimated cost and time to recruit and train a replacement.
- Review the recommended coverage amount based on revenue contribution and replacement cost.
- Consult a business insurance specialist to set an appropriate policy face value.
How the result changes with Key Person Annual Salary
| Key Person Annual Salary | Recommended Coverage |
|---|---|
| $227,000.00 | $1,135,000.00 |
| $719,500.00 | $3,597,500.00 |
| $1,310,500.00 | $6,552,500.00 |
| $1,803,000.00 | $9,015,000.00 |
What each input means
- Key Person Annual Salary
- Annual compensation of the key employee.
- Company Annual Revenue
- Total annual company revenue.
- Revenue Attribution
- Percentage of company revenue directly attributable to this key person.
- Replacement Recruitment Cost
- Cost to recruit, hire, and onboard a replacement including headhunter fees.
- Transition Period
- Months needed for a replacement to reach full productivity.
- Business Loans Tied to Key Person
- Outstanding business loans that require the key person's personal guarantee.
How this is calculated
Worked example, using the default values
- Identify Input Parameters4 parametersKey Person Annual Salary = 150000, Company Annual Revenue = 2000000, Revenue Attribution = 25, Replacement Recruitment Cost = 75000 = 6 input(s) provided
- Calculate Recommended CoverageRecommended Coverage750000 = $750,000
- Calculate Revenue Attributed to Key PersonRevenue Attributed to Key Person500000 = $500,000
- Calculate Lost Revenue During TransitionLost Revenue During Transition500000 = $500,000
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