Key Man Insurance Calculator
Our keyman insurance calculator estimates the monthly premium for business protection that pays your company a lump sum if a key person — a director, founder, or critical employee — dies or is diagnosed with a critical illness. The payout helps the business survive the financial impact of losing an irreplaceable individual.
Keyman Insurance Calculator
Calculate the recommended keyman (key person) insurance cover for your business. Protects against financial loss if a key employee dies or becomes critically ill.
What Is Keyman Insurance?
Keyman (or key person) insurance is a life or critical illness policy owned and paid for by the company, insuring the life of an individual whose loss would significantly damage the business financially. The sum assured is typically based on 5–10 times the key person’s salary, the profit contribution they generate, or the cost of finding and training a replacement. HMRC treats keyman premiums as a trading expense if the policy is for business protection purposes — meaning premiums are typically tax-deductible and the payout is taxable as a business receipt. Use our Life Insurance Calculator for personal term insurance costs as a comparison, and our Income Tax Calculator to model the tax position of any policy structure.
Frequently Asked Questions
A common approach is to cover 5 years of the key person’s salary, or the annual gross profit they generate, or the cost of recruiting and training a replacement.
Keyman insurance pays the business a cash sum to cover financial loss. Shareholder protection enables surviving shareholders to purchase a deceased shareholder’s shares from their estate — preventing shares passing to uninvolved parties. Both are important for business continuity planning.
Yes — the key person must consent to the policy and provide medical information. They must also understand that the company, not they or their family, will receive the benefit.
The company can continue paying premiums, assign the policy to the key person, or surrender the policy. Converting to personal ownership may be offered as part of a departure package.
Yes — keyman policies can include critical illness cover, paying on diagnosis of a serious specified condition during working life. This is often more likely to be claimed than the death benefit for working-age directors.
Enter the key person’s salary and the approximate revenue they generate or protect for the business. Key person insurance pays the business a lump sum on the death or critical illness of an individual whose loss would create significant financial harm — typically a founder, director, or specialist whose contribution is hard to replace quickly. The sum assured is usually calculated as a multiple of salary (up to 10×) or as the revenue attributable to the individual. Premiums are a business expense if the policy is owned by and pays out to the business and is not intended to benefit the key person’s estate. The lump sum helps cover recruitment costs, lost revenue during transition, and business continuity costs. Different tax treatment applies to different policy structures — take advice from an accountant before taking out the policy.
Important Information
This calculator is provided for general information and planning purposes only. It does not constitute financial or tax advice and should not be relied upon as such. Figures are indicative estimates based on simplified, publicly available criteria and stated assumptions. Actual results depend on your full circumstances. See our Disclaimer for further information.