Finance

Key Person Insurance Calculator

Find how much life insurance a business needs on a critical owner or employee.


Key Person Insurance Calculator

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Distinct from personal life insurance planning — key person insurance is owned by and pays the business itself, sized against what the business stands to lose.

How it works

Coverage need combines the cost to recruit and train a replacement, the profit the business is likely to lose during that transition, and any business debt tied to the key person (such as a personal guarantee).

What this does not include

This doesn’t estimate replacement cost, transition-period lost profit, or debt exposure itself — those figures come from the business’s own specifics, which this calculator combines rather than derives.

How to use this calculator

  1. Enter estimated replacement cost and lost profit during a transition.
  2. Enter any business debt tied to this specific person, if applicable.

Frequently asked questions

Who owns a key person policy?

The business itself — it pays the premiums and is the beneficiary, distinct from a policy an individual buys to protect their own family.

Is key person insurance tax-deductible?

Generally no for the premiums, though the death benefit is typically received tax-free by the business — a detail specific tax advice should confirm for a given situation.

Who typically needs key person coverage?

A founder, a top salesperson responsible for a large share of revenue, or a specialist whose knowledge or relationships would be hard to quickly replace.

Important: This is general information, not financial advice. Figures are estimates, and your lender or provider decides the real numbers. Check with a qualified adviser before acting on them.

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Written by

M. Whitfield

Personal finance writer

M. Whitfield writes the personal finance calculators, covering loans, mortgages, savings, tax and investment maths. The focus is on showing exactly which number goes into a formula and which assumptions a result depends on, so readers can tell when a figure applies to their situation and when it does not. Every finance page states what it does not account for as plainly as what it does.

Reviewed by

A. Whitfield-Reyes

Calculator reviewer — finance

A. Whitfield-Reyes reviews the finance calculators, checking compounding conventions, rate-period alignment, and whether each page is explicit about the costs and tax treatment it leaves out. Financial results are easy to state with false precision, so review focuses on whether the page makes its assumptions visible to a reader who is not looking for them.

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