WealthPillar · Free calculator
Buy-sell insurance calculator
Buy-sell insurance pays for the surviving owners of a business to buy a deceased owner's shares from their family, at the price set in the shareholders' agreement. The cover on each owner should match the value of their share of the business, and it should keep up as the business grows. Enter the business value and each owner's percentage below.
How much cover does each owner need?
Example figures are filled in. Replace them with your own.
Your estimate
General education only, not advice. Coverage depends on underwriting. WealthPillar is paid by insurer commission.
How this buy-sell insurance calculator works
- Value the business. Use the value in your shareholders' agreement, a recent valuation, or your best estimate of what a buyer would pay.
- Grow it forward. Policies last for years, so the calculator grows the value at the rate you choose. If the business doubles and the cover does not, the surviving owners have to find the rest.
- Split by ownership. Each owner's cover is the future value times their share. Two equal owners each need cover for half the business.
Check that the percentages add up to 100. If they do not, the calculator will tell you.
Why the agreement matters as much as the policy
The insurance only provides the money. The shareholders' agreement says who must buy, who must sell, at what price, and how the insurance proceeds are used. If the agreement and the policies do not match, the family and the surviving owners can end up negotiating at the worst possible time. Our guide to the insurance clause in a shareholders' agreement lists the gaps owners find most often. Your lawyer drafts the agreement, and your accountant should look at the tax side before the policies are set up.
Ways a buy-sell can be insured
- Corporate-owned. The company owns a policy on each owner and uses the payout to buy back or redeem the shares. Often the simplest to run with several owners.
- Criss-cross. Each owner owns a policy on the other owners and buys their shares personally. Simple with two owners, harder with more.
- Holding companies. Where each owner holds shares through a holdco, the structure needs advice from your accountant and lawyer before choosing who owns the policies.
The buy-sell insurance page explains these in more detail.
Common questions
How much buy-sell insurance do we need?
For each owner, the value of the business times that owner's percentage, grown to the value you expect over the years the policy will be in place. Review it when the business value changes or an owner joins or leaves.
What happens if the business grows and the cover does not?
The surviving owners still have to pay the agreed price. The shortfall usually comes from company cash, a loan, or payments to the family over several years. Reviewing cover every year or two avoids that.
Do we need disability buy-out cover as well?
Many agreements also deal with an owner who can no longer work. A disability buy-out policy can fund that purchase. It is a separate policy with its own waiting period.
See also the key person calculator and all of our calculators.
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General education only. Not individualized insurance, financial, tax or legal advice. Figures use 2026 rates and are estimates. All coverage is subject to underwriting and the terms of the policy. WealthPillar is paid by insurer commission.