Key person insurance sizing.

Business protection (key person insurance) covers the financial hit if a critical employee dies or becomes permanently unable to work. Cover includes profit impact during replacement period (12-24 months typical), recruitment costs for replacement, and business loans tied to that person's guarantee or involvement.

200,000 annual profit contribution from key person × 18 months = 300,000 profit impact. Plus 30,000 recruitment cost + 100,000 business loan payoff (if bank requires on death) = 430,000 total cover. Typical cost for healthy 45-year-old: 50-150/month for 10-year level term policy.

Key person protection is different from partnership or shareholder protection. Key person: company receives payout, continues operating. Partnership/shareholder: remaining partners receive funds to buy out deceased's share from their estate. Many businesses need both. the tax authority tax treatment: premiums usually deductible, payouts usually trading receipt (check with accountant for edge cases).

A worked example

Try the defaults: annual profit contribution of 200,000, replacement time of 18 months, recruitment cost of 30,000, business loans balance of 100,000. The tool returns 430,000.00. You can adjust any input and the result updates as you type — no submit button, no reload. That's the real power here: seeing how sensitive the output is to one or two assumptions.

What moves the number most

The result responds to Annual Profit Contribution, Replacement Time (months), Recruitment Cost, and Business Loans Balance. Not every input has equal weight. Flip one at a time toward extreme values to feel which ones move the needle most for your situation.

The formula behind this

Profit impact = (annual profit ÷ 12) × replacement months. Total = impact + recruitment + loans. Everything the calculator does is shown in the formula box below, so you can check the math against your own spreadsheet if you want.

What the score tells you

Headline financial numbers — income, savings, debt — each tell part of the story. This calculation stitches several together into a single read you can track over time. The value is in the direction, not the absolute number.

What this doesn't capture

The score is a composite of the inputs you provide. Life context — job security, family obligations, health, housing — doesn't appear in the math but shapes the real picture. Use the number as a prompt, not a verdict.