{"ok":true,"canonical_url":"https://dealroom.so/glossary/life-insurance-collateral-assignment","api_url":"https://dealroom.so/api/public/glossary/life-insurance-collateral-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-collateral-assignment","term":"Life Insurance Collateral Assignment","group":"The loan itself","definition":"This is when a life insurance policy is assigned to the lender as additional collateral for an SBA loan. It ensures the loan can be repaid if a key principal dies.","what_it_means":"For 7(a) loans, the SBA requires life insurance on key principals, assigned to the lender, for the loan's outstanding balance. You'll need to secure a policy or assign an existing one. This protects the lender and ensures the business can continue operating without the debt burden if tragedy strikes.","url":"https://dealroom.so/glossary/life-insurance-collateral-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"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"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":"assignment-of-policy-form","term":"Assignment of Policy Form","url":"https://dealroom.so/glossary/assignment-of-policy-form"}],"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"}]},"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 Collateral Assignment","url":"https://dealroom.so/glossary/life-insurance-collateral-assignment","source_type":"DealRoom Data"}}