A typical way to consider this would be the costs of finding and hiring a replacement for someone with the same skills and knowledge. A simple formula which is commonly used would be to consider up to ten times the key individual's earnings for life cover with a lower figure used for critical illness cover (typically up to five times earnings).
Sum assured (10x earnings)
Sum assured (5x earnings)
A simple formula which is commonly used looks at the key person's contribution to either gross or net profits and allows a time for recovery following the loss of the key person's contribution to the business. This calculator incorporates a recovery period for the business dependent on the profit figure used.
This amount would include any existing key