{"id":4658,"date":"2026-10-24T06:35:06","date_gmt":"2026-10-24T06:35:06","guid":{"rendered":"https:\/\/nrcpas.com\/life-insurance-guides\/key-person-insurance\/key-person-insurance-value-the-key-employee\/"},"modified":"2026-10-29T23:23:01","modified_gmt":"2026-10-29T23:23:01","slug":"key-person-insurance-value-the-key-employee","status":"publish","type":"page","link":"https:\/\/nrcpas.com\/life-insurance-guides\/key-person-insurance\/key-person-insurance-value-the-key-employee\/","title":{"rendered":"Value a Key Employee for Life Insurance: 3 Methods"},"content":{"rendered":"\n
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Key Person Insurance | Florida Businesses<\/p>

Value a Key Employee for Life Insurance, Step by Step<\/h1>

Three ways business owners estimate the coverage a key employee's life may need, with a CPA's view of tax and cash flow. Protect your loved ones and your business.<\/p>

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By Nischay Rawal \u00b7 Published October 24, 2026<\/p>\n\n

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Here’s how to value a key employee for life insurance. Start by asking what the business would lose if that person died or became disabled. Then estimate that loss with one or more of three methods: lost profits, replacement cost, and recruiting and training cost.<\/p>\n

Each method gives an estimate, not an exact number. Each one rests on assumptions about revenue, costs, and time. Write those assumptions down and test them against each other. You’ll end up with a figure you can explain to a lender, a partner, or an accountant.<\/p>\n

This page uses illustrative figures, not rules of thumb. Your numbers will look different.<\/p>\n

Who Counts as a Key Employee for Key Person Insurance?<\/h2>\n

Job title alone doesn’t decide it. The real question is what the business would actually lose.<\/p>\n

Key person insurance pays the business for financial losses caused by a key employee’s death or disability, according to the Insurance Information Institute’s guide to life insurance for key employees<\/a>. That loss is what you’re trying to measure.<\/p>\n

Common roles to review include:<\/p>\n