{"id":6864,"date":"2026-10-28T02:10:00","date_gmt":"2026-10-28T02:10:00","guid":{"rendered":"https:\/\/nrcpas.com\/life-insurance-guides\/key-person-insurance\/key-person-insurance-how-to-replace-income\/"},"modified":"2026-10-29T23:31:31","modified_gmt":"2026-10-29T23:31:31","slug":"key-person-insurance-how-to-replace-income","status":"publish","type":"page","link":"https:\/\/nrcpas.com\/life-insurance-guides\/key-person-insurance\/key-person-insurance-how-to-replace-income\/","title":{"rendered":"How Do I Replace a Key Employee’s Income If They Die?"},"content":{"rendered":"\n
<\/span>\"Two
\n

Key Person Insurance | Florida Businesses<\/p>

Plan Ahead for the Business Impact of Losing a Key Employee<\/h1>

Key person insurance can help a business prepare for the financial impact of losing someone it depends on. NR CPAs & Business Advisors, based in Miami, works with Florida business owners to review their coverage options. Insurance is offered by licensed agent Nischay Rawal, separately from our accounting practice.<\/p>

Call us today for a coverage review<\/a><\/div>
Call us today for a coverage review<\/a><\/div><\/div>\n<\/div><\/div>\n\n\n

By Nischay Rawal \u00b7 Published October 27, 2026<\/p>\n\n

\n\n\n

The short answer to “how do I replace a key employee’s income if they die” is this: you replace the work and revenue that person produced, not just their paycheck. That takes three steps. Measure the loss, price the replacement, and plan the cash to carry the gap. Key person life insurance can then be one source of funds. This guide walks through each step in plain language.<\/p>\n

What Replacing a Key Employee’s Income Means for Your Business<\/h2>\n

Replacing a key employee’s income means covering what the business loses when that person’s work stops. It doesn’t mean matching a salary line for line. A key employee might close the biggest accounts, run a critical project or know how a process really works. Their paycheck is only part of what the company loses.<\/p>\n

If you’re dealing with this loss now, you may be grieving and making business decisions at the same time. Taking the numbers one step at a time can make the next decision feel more manageable.<\/p>\n

This guide focuses on the business’s money: revenue, costs and cash. It doesn’t cover the employee’s personal estate or family matters. Those usually follow a separate process. Keeping the two sets of questions apart keeps the company’s decisions clear.<\/p>\n\n

\n

If you're handling a loss right now, or planning ahead so one departure doesn't stall payroll, our team can help. Talk it through with our team — we can walk you through how a situation like yours is usually handled and what your options are.<\/p>

Schedule a coverage review<\/a><\/div>
Schedule a coverage review<\/a><\/div><\/div>\n<\/div>\n

Step 1: Measure What the Business Actually Loses<\/h2>\n

The first step is to measure the revenue, margin and work that the person’s absence removes. Write each category down in dollars before you decide anything else.<\/p>\n

Look at three areas. First, revenue tied to the person’s clients or projects. Second, the profit margin on work they led. A project that once earned well may now run slower or cost more. Third, the tasks they handled that no one else can easily take over.<\/p>\n

Estimate the lost contribution over a realistic recovery period. That period depends on the role, how easily the work can be handed off, and the market for that skill. A sales lead with a long client list may take longer to replace than a bookkeeper. Plan for a range, not a single guess.<\/p>\n

Don’t stop at the salary. Lost revenue and slower delivery often cost more than the wages do.<\/p>\n

Document the details now. Write down the person’s responsibilities, client relationships, open projects, and the vendor and system knowledge only they hold. Do this while the details are still fresh and easy to find.<\/p>\n

Step 2: Price the Cost of Replacing the Person<\/h2>\n

Replacing the person costs more than the salary you’d offer a new hire. The total includes one-time costs and ongoing costs. Put every item on one worksheet so you can see the full number.<\/p>\n

One-time costs usually include:<\/p>\n