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Key Man Insurance Calculator

Reason for cover
Amount of cover
Life cover
Critical illness cover
Contribution to profit
Contribution (£) of key person to the gross profit of the business multiplied by years to recovery
OR
contribution (£) of key person to the net profit of the business multiplied by years to recovery
*Total key person cover (excluding loans) should not exceed 2 X average gross profit or 5 X average net profit.
Replacement costs
Agency Fees
Salary/Pension/Bonus
Car Lease
Other - relocation, training
Other Costs
eg. SIPP/SSAS Liquidity

Use our key man insurance calculator to work out how much you should cover your key person for. You can then get an online quote here.

Why use a Key Man Insurance Calculator

A key person insurance calculator is a valuable tool that helps businesses determine the appropriate amount of insurance cover for their key employees.

Key man insurance serves as a crucial safeguard for businesses by protecting them against financial losses incurred due to the loss of key personnel. However, determining the appropriate coverage amount can be a complex task. To simplify this process and ensure sufficient cover, you should use a keyman insurance calculator, also known as a key man insurance premium calculator. 

Determining the appropriate cover amount requires careful evaluation, which is where a key man insurance calculator like ours proves invaluable.

Accurately assessing the financial impact of losing a key employee is crucial for selecting an appropriate amount. A key man insurance calculator simplifies this process by considering various factors such as the employee’s role, salary, responsibilities, and the potential costs associated with their absence.

By inputting this information, the calculator can provide an estimate of the cover amount needed to offset the financial repercussions.

Moreover, a key man insurance calculator helps businesses avoid underinsurance or over insurance.

Underinsurance leaves the company vulnerable to significant financial losses, while over insurance leads to unnecessary premium payments.

The calculator takes into account the unique circumstances of the business and provides a comprehensive coverage estimate, ensuring adequate protection without unnecessary expenditure.

Benefits of a Key Man Insurance Premium Calculator Using a key man insurance premium calculator offers several advantages, including:

  • a) Accuracy and Customization: The calculator uses specific business data to provide a tailored coverage estimate, ensuring accuracy in assessing potential financial losses.
  • b) Time and Cost Efficiency: Calculating coverage manually can be time-consuming and prone to errors. A calculator streamlines the process, saving time and resources while delivering accurate results.
  • c) Flexibility for Comparison: Businesses can use a  calculator to evaluate multiple coverage scenarios, enabling them to compare premiums and coverage amounts before finalizing a policy.
  • d) Risk Assessment: By assessing various risk factors associated with key personnel, such as age, health, and industry risks, the calculator assists in understanding the potential financial impact of their absence.
  • e) Decision-Making Support: Armed with accurate coverage estimates, businesses can make informed decisions about the level of coverage needed, providing financial stability during uncertain times.

Conclusion 

Utilizing our calculator simplifies this process by providing accurate estimates based on specific business data, ensuring the right cover amount and the right price.

 

How a Keyman Insurance Premium is Calculated

AGE: The age of the key person is a crucial factor in determining the premium. Younger individuals typically attract lower premiums as they are considered to have a longer working life ahead, reducing the risk for the insurance company. On the other hand, older individuals may have higher premiums due to a shorter expected working life and potentially higher health risks associated with age.

HEALTH: The state of health of the key person is another significant consideration. Insurance companies assess the health risks based on medical history, existing conditions, and lifestyle choices. A key man with good health and no pre-existing conditions is likely to receive more favorable premiums compared to someone with health issues or a higher perceived risk.

SMOKER STATUS: Smoker status also plays a role in determining the premium. Smokers are considered to have a higher risk of developing health issues, such as heart disease or cancer, which can affect their ability to work. Consequently, smokers generally pay higher premiums compared to non-smokers.

TERM: The term of the policy directly affects the premium calculation. Generally, longer terms result in higher premiums due to the increased risk exposure for the insurance company. This is because the longer the key person is insured, the higher the probability that a claim may be filed during that time.

AMOUNT OF COVER: Lastly, the amount of cover required for the key person influences the premium. Higher coverage amounts lead to increased premiums since the insurance company assumes a greater financial risk. This is because the insurer would need to pay out a larger sum in the event of a claim.

By inputting these factors into a key man premium calculator, insurance companies can provide an accurate estimate of the premium cost for key man insurance. The calculator uses actuarial tables, statistical data, and risk assessment algorithms to calculate the premium, ensuring fairness and consistency in the pricing process. Insurance companies often update these calculators to reflect changes in demographics, health trends, and insurance market dynamics, ensuring that the premiums accurately reflect the risks involved.

Adding Critical Illness

Critical illness can significantly impact the cost of keyman insurance. Keyman insurance is designed to provide financial protection to a company in the event that a key individual suffers from a serious illness or disability. When a critical illness is taken into account, the insurance company faces an increased risk of having to pay out a claim.

The presence of critical illness coverage in a keyman insurance policy can result in higher premiums. This is because the likelihood of a claim being filed due to a critical illness is higher than that of a claim resulting from death or disability alone. Critical illnesses such as cancer, heart disease, stroke, or organ failure can have a substantial impact on the key person’s ability to work and contribute to the company’s success.

 

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UK’s Number One Business Protection Specialist.