What this calculator tells you
When a business owner dies, two families feel it: the one at home and the one at work. Loans still need paying, partners still need a buyout, and staff still need someone to lead. Personal cover sized only for home costs leaves the business side uncovered, and that gap can force a rushed sale.
This calculator sizes the business side separately: debts, the buyout value of the owner's share, and the cost of replacing a key person, minus cover already in place.
The formula behind the result
Suggested extra cover = business debts + (business value x ownership share) + (key-person salary x years to replace), minus existing life cover, floored at zero.
Business debts are loans, leases, or guarantees the business still owes. The buyout share is the value of the owner's stake that surviving partners or the family would need to buy or sell. The key-person part values the time and cost of replacing someone the business cannot run without, priced here as salary multiplied by years to replace them.
The model keeps each part separate so an owner can see which piece drives the total. A solo freelancer mostly needs the debt and key-person parts, while a partner in a larger firm usually finds the buyout share dominates.
How to fill in each field
- Enter business debts, the current business value, and your ownership share percentage.
- Add the key person's annual salary and how many years it would take to replace them.
- Subtract existing cover to see the extra amount needed for the business alone.
Worked example
Consider an owner with $100,000 of business debts, a business valued at $400,000, and a 50% share, giving a buyout value of $200,000. Add a key person on $80,000 a year who would take 3 years to replace, worth $240,000, and the total business need is $540,000.
With $100,000 of existing cover, the suggested extra cover is $440,000. If the value is uncertain, try a lower and a higher value to see the range before talking to partners.
When the result may be too high or too low
Business values are estimates unless professionally valued, and tax, loan guarantees, and partnership rules differ by country and legal structure, so this result is a planning figure only.
Personal family needs are not included here. Add this business gap to a family needs calculation for a full picture, and get legal and tax advice before setting up buy-sell funding or key-person policies.
Frequently asked questions
What is a buyout share, and why does it need cover?
A buy-sell agreement sets how a deceased owner's share is valued and who buys it. Without one, the family may inherit a share they cannot sell, while the surviving owners face a partner they did not choose.
Who counts as a key person?
Anyone whose skills, clients, or licenses the business depends on. For a small firm that may be the owner alone; for a larger firm it may be a lead engineer, a top salesperson, or a founder with key relationships.
Can I use this figure as a business valuation?
This tool sizes a personal life policy need, not a business valuation. Get a professional valuation for the business value, and take legal advice on agreements, tax, and ownership rules in your country before signing anything.
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Edited and checked by Talha Shah. Last reviewed 2026-11-04.