Key Person Insurance Calculator

This calculator estimates how much key person insurance a New Zealand business should hold, by adding up the financial hit the company would take if it lost the person who drives much of its success. Key person cover, sometimes called key man insurance, pays the business a lump sum if a crucial individual dies or is disabled, giving it the breathing room to keep trading, repay debt and find and train a successor. Many small businesses depend heavily on one or two people, often the owner, a star salesperson or a specialist who holds essential relationships or knowledge, yet they insure the building and the vehicles while leaving this far bigger risk uncovered. You enter the annual gross profit the key person is responsible for, the number of years it would realistically take the business to recover, the cost to recruit and train a replacement, and any business debt that would need clearing, and the calculator combines them into a suggested sum insured. Recovery often takes longer than owners expect, because rebuilding revenue and relationships is slower than filling a seat. Treat the result as a considered starting point and refine it with an adviser, who can also structure ownership of the policy and the tax treatment correctly.

A common method: profit driven over the recovery years, plus recruitment and any business debt tied to the person. Confirm with an adviser. Estimate only.