{"ok":true,"canonical_url":"https://dealroom.so/glossary/policy-lapse","api_url":"https://dealroom.so/api/public/glossary/policy-lapse","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":"policy-lapse","term":"Policy lapse","group":"The loan itself","definition":"This occurs when an insurance policy terminates due to unpaid premiums. If your required life insurance policy lapses, it violates your SBA loan agreement.","what_it_means":"An SBA loan typically requires key person life insurance for a specified period. A policy lapse means the collateral is gone, putting you in default. Set up automatic payments and regularly confirm your policy is active to avoid this serious issue.","url":"https://dealroom.so/glossary/policy-lapse","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":"loan-default","term":"Loan default","url":"https://dealroom.so/glossary/loan-default"}],"related_questions":[{"question":"What defines 'insurable interest' for a business life insurance policy?","url":"https://dealroom.so/sba-7a/questions/what-defines-insurable-interest-for-a-business-life-insurance-policy"},{"question":"Who is responsible for paying premiums on a business life insurance policy?","url":"https://dealroom.so/sba-7a/questions/who-is-responsible-for-paying-premiums-on-a-business-life-insurance-policy"},{"question":"Who typically owns the life insurance policy on a seller post-acquisition?","url":"https://dealroom.so/sba-7a/questions/who-typically-owns-the-life-insurance-policy-on-a-seller-post-acquisition"},{"question":"What is the specific SBA policy document that addresses collateral life insurance requirements?","url":"https://dealroom.so/sba-7a/questions/what-is-the-specific-sba-policy-document-that-addresses-collateral-life-insurance-requirem"},{"question":"Who owns and is the beneficiary of a key-person life insurance policy?","url":"https://dealroom.so/sba-7a/questions/who-owns-and-is-the-beneficiary-of-a-key-person-life-insurance-policy"},{"question":"Are death benefits from a business life insurance policy generally taxable to the recipient?","url":"https://dealroom.so/sba-7a/questions/are-death-benefits-from-a-business-life-insurance-policy-generally-taxable-to-the-recipien"}]},"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 — Policy lapse","url":"https://dealroom.so/glossary/policy-lapse","source_type":"DealRoom Data"}}