Immediate Business Costs
—Replacement costs, financing needs, and other specific obligations, after subtracting insurance and resources already available.
Free educational business tool
Key Person Insurance Calculator
Estimate the financial impact your business could face if an important owner, executive, employee, or revenue producer were suddenly gone. See a hard-cost protection floor, a business continuity target, and a broader resilience target based on the numbers you enter.
About 5 minutesNo contact information requiredShare your answers only if you choose
Start with your business exposure
How much Key Person insurance might your business need?
This calculator estimates how much money a business may want available if a key person dies or gets serious ill. It considers the financial contribution that could be lost, the time and cost to replace the person, important business obligations, and resources already available. It does not use a simple salary multiple or automatically assume all business debt should be insured.
Step 1 of 6About This Person
Generis Organization — Key Person Insurance Calculator
Key Person role:
Educational planning estimate
Your Key Person Protection Estimate
These estimates show the immediate costs the business could face, the broader financial impact while replacing this person, and an optional extra cash cushion.
Business Continuity Estimate
—Adds the estimated financial loss while the business finds, hires, and gets a replacement fully up to speed.
Continuity + Extra Cash Cushion
—Adds the optional operating cash and recovery spending you chose.
Partial estimate
Not estimated
Complete the core continuity assumptions to create a range.
This Owner May Create Two Different Insurance Needs
This calculator estimates the financial impact of losing the person's contribution to the business. It does not include the separate amount that may be needed to purchase their ownership interest under a Buy-Sell Agreement. Learn about Buy-Sell Agreement life insurance.
How We Got This Number
Annual business impact
Modeled contribution disruption
Replacement & transition
Other business exposure
Optional resilience
Existing protection and resources
Result tiers
Important: This is an educational planning estimate based on the numbers entered. It is not a business valuation, insurance quote, underwriting decision, legal or tax opinion, or guarantee that a particular amount of coverage is available. The insurance company determines eligibility, financial justification, pricing, and policy terms.
This calculator estimates Key Person business exposure. It does not calculate a Buy-Sell ownership obligation, disability buy-out funding, formal business valuation, estate-tax exposure, or the tax treatment of insurance proceeds.
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Kirt can review the assumptions behind your estimate, help separate Key Person exposure from Buy-Sell or other business needs, and compare available coverage options from multiple insurance companies.
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How the Key Person Insurance Calculator Works
The calculator separates the estimate into three layers so you can see what each assumption changes. It does not use an automatic salary multiple.
Essential Protection Floor
Replacement and transition costs + financing exposure + critical obligations − existing dedicated resources
Continuity Target
Essential gross need + modeled contribution disruption + additional customer loss − existing dedicated resources
Resilience Target
Continuity gross need + operating cushion + additional stabilization cost − existing dedicated resources
Planning Range
When enough assumptions are known, the Continuity and Resilience estimates form the planning range. The displayed range uses the calculated amounts without automatically increasing them.
Reviewed by Kirt Patel, independent life insurance advisor and broker.
Hypothetical example
How the Three Tiers Can Build
A business estimates a $240,000 annual economic contribution, 6 months to hire a replacement, 6 months ramping at 50% productivity, $60,000 of replacement and transition costs, $40,000 of critical obligations, and $50,000 of existing dedicated resources. It adds no customer or financing loss, uses $25,000 of essential monthly expenses for a 3-month cushion, and adds $0 of stabilization cost.
- Pre-hire contribution loss
- $120,000
- Ramp shortfall
- $60,000
- Modeled contribution disruption
- $180,000
- Essential gross need
- $100,000
- Essential Protection Floor
- $50,000
- Continuity gross need
- $280,000
- Continuity Target
- $230,000
- Operating cushion
- $75,000
- Resilience gross need
- $355,000
- Resilience Target
- $305,000
- Planning range to review
- $230,000–$305,000
This is a hypothetical educational example, not a recommendation or insurance quote.
What Each Input Means
Financial contribution
The annual economic value you estimate the person adds, entered directly or modeled from influenced revenue and contribution margin.
Replacement timing
The expected hiring period plus the productivity shortfall while a replacement ramps up.
Replacement and transition costs
Recruiting, relocation, training, temporary support, retention, compensation, and other direct transition costs.
Critical obligations
Known business obligations and financing exposure that may need funding after a loss.
Customer or contract loss
An optional amount beyond the financial contribution already modeled, included only when you confirm it is not duplicated.
Operating cushion
Essential monthly business expenses multiplied by the chosen number of cushion months.
Existing resources
Existing Key Person coverage, dedicated reserves, and other resources specifically available for this risk.
For a deeper explanation of coverage structure and business use, visit Key Person Insurance.
Key Person Protection Is Different From Buy-Sell Funding
Key Person insurance protects the business from the financial impact of losing an important person. Buy-Sell funding is a separate ownership-transfer need. An owner may create both exposures, but this calculator does not calculate ownership value. Learn about Buy-Sell Agreement Life Insurance.
Frequently Asked Questions
It estimates replacement costs, other business obligations, the financial contribution that may be lost while a replacement is found and gets up to speed, and any optional extra cash cushion you choose. Existing Key Person insurance and dedicated business resources are then subtracted from the estimated need.
Yes. "Key man insurance" is an older term commonly used for the same general business insurance concept. "Key Person insurance" is the broader term used on this site because the insured person may be an owner, executive, employee, salesperson, specialist, or another important person.
No. If the key person is also an owner, a separate Buy-Sell funding need may exist. This calculator does not include the value of the owner's business interest or the amount required to purchase that interest.
No. The result is an educational business-planning estimate based on the numbers entered. An insurance company separately determines eligibility, financial justification, available coverage, pricing, and policy terms.
Not necessarily. Salary may provide useful context, but this calculator does not automatically multiply salary. It models business exposure using the financial contribution, replacement period, transition costs, obligations, resources, and other assumptions entered.