{"ok":true,"canonical_url":"https://dealroom.so/glossary/assignment-of-policy","api_url":"https://dealroom.so/api/public/glossary/assignment-of-policy","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"assignment-of-policy","term":"Assignment of policy","group":"Doing the deal","definition":"This is when you formally transfer ownership of a life insurance policy to the lender as collateral for your SBA loan. It ensures the lender gets paid if something happens to you, the key person.","what_it_means":"For 7(a) loans, the SBA requires life insurance on key principals if the loan's repayment is dependent on their management. You'll sign an \"assignment of policy\" form, making the lender the primary beneficiary up to the loan amount. This protects the lender's interest.","url":"https://dealroom.so/glossary/assignment-of-policy","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"life-insurance","term":"Life insurance","url":"https://dealroom.so/glossary/life-insurance"},{"slug":"key-man-insurance","term":"Key man insurance","url":"https://dealroom.so/glossary/key-man-insurance"},{"slug":"collateral","term":"Collateral","url":"https://dealroom.so/glossary/collateral"},{"slug":"sba-guaranty","term":"SBA guaranty","url":"https://dealroom.so/glossary/sba-guaranty"}],"related_questions":[{"question":"Are there specific requirements for the type of life insurance policy needed for a collateral assignment on a key principal?","url":"https://dealroom.so/sba-7a/questions/are-there-specific-requirements-for-the-type-of-life-insurance-policy-needed-for-a-collate"},{"question":"Can a term life insurance policy be used for the collateral assignment requirement on an SBA 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/can-a-term-life-insurance-policy-be-used-for-the-collateral-assignment-requirement-on-an-s"},{"question":"What are the specific requirements for naming the lender as the loss payee on a life insurance policy collateral assignment?","url":"https://dealroom.so/for-lenders/questions/what-are-the-specific-requirements-for-naming-the-lender-as-the-loss-payee-on-a-life-insur"},{"question":"Can a term life insurance policy be used for the required collateral assignment on key principals for a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/can-a-term-life-insurance-policy-be-used-for-the-required-collateral-assignment-on-key-pri"},{"question":"Can a lender rely on a universal life insurance policy that has a cash value for a collateral assignment on a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/can-a-lender-rely-on-a-universal-life-insurance-policy-that-has-a-cash-value-for-a-collate"},{"question":"How does a collateral assignment of life insurance protect a lender?","url":"https://dealroom.so/sba-7a/questions/how-does-a-collateral-assignment-of-life-insurance-protect-a-lender"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Assignment of policy","url":"https://dealroom.so/glossary/assignment-of-policy","source_type":"DealRoom Data"}}