Key Person Cover calculator

This calculator uses the key person’s contribution to the profits of the business as a suggested amount of cover.

The results are based on the information you have provided and should only be used as a guide. Your information is only used to work out these results, therefore LV= will not store or retain any data once you exit the tool.

Loss of profits to the business

The loss of profits to the business is a good start point to calculate the cost of replacing a key person in the business. There are many other ways to do this, and other factors may need to be added, particularly for highly specialised industries where the costs will be higher.

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Company name

Name of key person

Is the person's contribution to 'gross' or 'net' profit?

For key people who directly influence money coming into the business (such as sales staff) use gross profit. For key people responsible for managing cash flow (such as a managing director) use net profit. Commonly used multiples are applied. The calculator uses a profit multiple of 2 for those whose contribution is to gross profit and 5 for contribution to net profit.

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Average profit from the last two years

Use the average Profit after Tax for the last three years.
The figures should ideally be obtained from financial statements. The higher the profit, the higher the cover amount required.

Portion of profits key person directly responsible for?

Suggested key person cover for