{"ok":true,"canonical_url":"https://dealroom.so/glossary/life-insurance-assignment","api_url":"https://dealroom.so/api/public/glossary/life-insurance-assignment","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":"life-insurance-assignment","term":"Life insurance assignment","group":"Doing the deal","definition":"A policy on you, payable to the lender. Required when the business depends on you and collateral falls short of the loan.","what_it_means":"When the lender requires life insurance as part of the loan conditions, you assign the policy to them as beneficiary up to the outstanding loan balance. If you die, the lender collects first; any remaining benefit goes to your estate. Lenders typically require the policy be in place before closing, so start the application early — underwriting can take four to six weeks. Term life is the standard choice: match the policy term to the loan term.","url":"https://dealroom.so/glossary/life-insurance-assignment","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":"key-man-insurance","term":"Key man insurance","url":"https://dealroom.so/glossary/key-man-insurance"},{"slug":"personal-guarantee","term":"Personal guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"collateral-shortfall","term":"Collateral shortfall","url":"https://dealroom.so/glossary/collateral-shortfall"},{"slug":"7a-loan","term":"7(a) loan","url":"https://dealroom.so/glossary/7a-loan"}],"related_questions":[{"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"},{"question":"When does the SBA typically mandate collateral assignment of life insurance for a business loan?","url":"https://dealroom.so/sba-7a/questions/when-does-the-sba-typically-mandate-collateral-assignment-of-life-insurance-for-a-business"},{"question":"What are the specific requirements for life insurance collateral assignment when multiple key principals exist?","url":"https://dealroom.so/for-lenders/questions/what-are-the-specific-requirements-for-life-insurance-collateral-assignment-when-multiple-"},{"question":"How does a lender ensure proper collateral assignment of life insurance on multiple key principals?","url":"https://dealroom.so/for-lenders/questions/how-does-a-lender-ensure-proper-collateral-assignment-of-life-insurance-on-multiple-key-pr"},{"question":"When is life insurance collateral assignment required for key principals in an acquisition, and for whom?","url":"https://dealroom.so/sba-7a/questions/when-is-life-insurance-collateral-assignment-required-for-key-principals-in-an-acquisition"},{"question":"When is collateral assignment of life insurance required for principals on an SBA 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/when-is-collateral-assignment-of-life-insurance-required-for-principals-on-an-sba-7-a-loan"}],"related_tool":{"label":"Seller life insurance guide","url":"https://dealroom.so/seller-life-insurance"}},"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 — Life insurance assignment","url":"https://dealroom.so/glossary/life-insurance-assignment","source_type":"DealRoom Data"}}