{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/for-general-business-protection-should-the-business-or-individual-owners-own-the-life-insu","api_url":"https://dealroom.so/api/public/questions/for-general-business-protection-should-the-business-or-individual-owners-own-the-life-insu","question":"For general business protection, should the business or individual owners own the life insurance policy?","topic":"Business life insurance & protection","audience":"borrower","bot_mode":"buyer","short_answer":"For general business protection, such as key-person coverage or funding an entity-purchase buy-sell agreement, the business itself should typically own the life insurance policy.","rule":"When the business owns the policy, it has control over the asset, pays the premiums from business funds, and receives the death benefit directly. This ensures the funds are used for business purposes, like operational continuity or buying out a deceased owner's share.","example":"To protect against the death of its CEO, Tech Solutions Inc. purchases and owns a $2,000,000 policy on the CEO. The company pays the premiums, and upon the CEO's death, the $2,000,000 is paid to Tech Solutions Inc. to hire a new CEO and manage potential disruptions.","what_lenders_check":"Lenders prefer the business to own policies that protect its continuity, especially for key-person and collateral assignment. This structure simplifies collateral assignment and ensures the death benefit directly benefits the borrowing entity.","required_facts":["Business ownership common","Business pays premiums","Business receives benefit","Ensures business use of funds"],"source_families":[],"official_sources":[],"related_questions":[{"question":"What is key-person life insurance and why is it crucial for small businesses?","url":"https://dealroom.so/sba-7a/questions/what-is-key-person-life-insurance-and-why-is-it-crucial-for-small-businesses"},{"question":"Who should a business identify and insure as a key person?","url":"https://dealroom.so/sba-7a/questions/who-should-a-business-identify-and-insure-as-a-key-person"},{"question":"What is the typical amount of key-person life insurance coverage needed?","url":"https://dealroom.so/sba-7a/questions/what-is-the-typical-amount-of-key-person-life-insurance-coverage-needed"},{"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":"What are the tax implications of key-person life insurance premiums and benefits?","url":"https://dealroom.so/sba-7a/questions/what-are-the-tax-implications-of-key-person-life-insurance-premiums-and-benefits"},{"question":"Why would a buyer require life insurance on a seller during business acquisition?","url":"https://dealroom.so/sba-7a/questions/why-would-a-buyer-require-life-insurance-on-a-seller-during-business-acquisition"}],"related_terms":[{"term":"Whole life insurance policy","url":"https://dealroom.so/glossary/whole-life-insurance-policy"},{"term":"Universal life insurance policy","url":"https://dealroom.so/glossary/universal-life-insurance-policy"},{"term":"Decreasing term life insurance policy","url":"https://dealroom.so/glossary/decreasing-term-life-insurance-policy"},{"term":"Life insurance","url":"https://dealroom.so/glossary/life-insurance"},{"term":"General Liability Insurance","url":"https://dealroom.so/glossary/general-liability-insurance"},{"term":"Universal Life Policy","url":"https://dealroom.so/glossary/universal-life-policy"}],"related_tools":[{"name":"Life insurance coverage estimator","url":"https://dealroom.so/seller-life-insurance#ins-estimator"},{"name":"Request insurance quotes","url":"https://dealroom.so/seller-life-insurance#ins-quote"}],"data_freshness":{"last_reviewed":"2026-06-15","sba_rule_sources_checked_through":"2026-06-15"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/sba-7a/questions/for-general-business-protection-should-the-business-or-individual-owners-own-the-life-insu","source_type":"DealRoom Q&A"},"caveats":["Grounded in the current SBA rulebook; verify against official sources before relying on it for a live deal.","Not legal, tax, or financial advice and not an approval decision."]}