Business Life Insurance Needs Calculator

Methodology

1. Revenue at risk during the transition = annual revenue × share of revenue at risk (%) × transition months ÷ 12
2. Covering the owner's role during the transition = owner's annual compensation × transition months ÷ 12
3. Replacement cost = the one-time amount you enter
4. Business debt = the amount you enter
5. Ownership interest of the owner considered = business value × that owner's ownership percentage (only when a business value is entered)
6. Less existing dedicated coverage
7. Midpoint = the sum of the rows above, never below zero; illustrative range = midpoint ± 25%

Assumptions

• The illustration considers the loss of one owner at a time: the owner you select.
• Paying someone to perform the owner's role is assumed to cost about what the owner is paid. Enter a different compensation figure if you expect otherwise.
• There is no standard share of revenue at risk; the percentage is your own estimate.
• Ownership percentages must add up to 100 percent.
• Owner compensation is added here, as the cost of covering the owner's role. The Key Person Insurance Calculator subtracts compensation instead, as pay the business no longer makes while a key person's role is vacant. Each tool's figure follows its own stated assumption.

Limitations

• This simplified sum assumes the amounts entered are independent, available in full and measured consistently. It does not model taxes, policy terms, underwriting, valuation disputes, double counting or timing. Revenue is not profit. Verify inputs with your advisers.
• The rows can overlap (for example, lost revenue and the cost of covering the owner's role). They are added as entered.
• Educational illustration only. Not a quote, actuarial calculation, tax or legal advice, or individualized financial or insurance recommendation.
• Structure, ownership and tax treatment should be confirmed with qualified tax, legal and insurance professionals.

Methodology version 1.2.0, 2026-10-13.