The monetary worth of your key person insurance cannot be determined using a predetermined formula. However, to begin, you might want to consider the financial impact that losing a key employee will have on your business.
For instance, if you're a lone proprietor purchasing key person insurance on yourself, you might want enough coverage to assist your heirs in winding down your business and paying off any outstanding obligations from the business. On the other side, let's say you run a bigger business and are covering a crucial worker. In that event, you might require sufficient insurance to, for instance, replace the employee's sales income or act as a financial safety net while you look for a suitable replacement.