{"ok":true,"canonical_url":"https://dealroom.so/glossary/sba-mandated-life-insurance","api_url":"https://dealroom.so/api/public/glossary/sba-mandated-life-insurance","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":"sba-mandated-life-insurance","term":"SBA-Mandated Life Insurance","group":"The loan itself","definition":"The SBA requires life insurance on key principals for most 7(a) loans to protect the lender in case of the borrower's death, ensuring the loan can still be repaid.","what_it_means":"For an SBA 7(a) loan, if a key principal's death would jeopardize the business's ability to repay the loan, the lender must require life insurance. The policy amount typically covers the outstanding loan balance, with the lender assigned as the beneficiary. Factor the cost of premiums into your cash flow projections.","url":"https://dealroom.so/glossary/sba-mandated-life-insurance","official_sources":[{"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"},{"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-principal","term":"Key principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"assignment-of-policy-form","term":"Assignment of Policy Form","url":"https://dealroom.so/glossary/assignment-of-policy-form"},{"slug":"personal-guarantee","term":"Personal guarantee","url":"https://dealroom.so/glossary/personal-guarantee"}],"related_questions":[{"question":"Can the borrower's business entity be named as the beneficiary for SBA-mandated life insurance, instead of the lender?","url":"https://dealroom.so/for-lenders/questions/can-the-borrower-s-business-entity-be-named-as-the-beneficiary-for-sba-mandated-life-insur"},{"question":"When is term life insurance more suitable than permanent life insurance for business protection?","url":"https://dealroom.so/sba-7a/questions/when-is-term-life-insurance-more-suitable-than-permanent-life-insurance-for-business-prote"},{"question":"How does disability insurance complement life insurance for business protection?","url":"https://dealroom.so/sba-7a/questions/how-does-disability-insurance-complement-life-insurance-for-business-protection"},{"question":"Is a decreasing term life insurance policy acceptable for the SBA's life insurance requirement on a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/is-a-decreasing-term-life-insurance-policy-acceptable-for-the-sba-s-life-insurance-require"},{"question":"How does business overhead expense insurance differ from key-person life insurance?","url":"https://dealroom.so/sba-7a/questions/how-does-business-overhead-expense-insurance-differ-from-key-person-life-insurance"},{"question":"Can a borrower's existing personal life insurance policy be used to satisfy the SBA's life insurance requirement for a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/can-a-borrower-s-existing-personal-life-insurance-policy-be-used-to-satisfy-the-sba-s-life"}]},"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 — SBA-Mandated Life Insurance","url":"https://dealroom.so/glossary/sba-mandated-life-insurance","source_type":"DealRoom Data"}}