{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/must-the-insured-business-owner-provide-consent-for-a-company-to-purchase-a-life-insurance","api_url":"https://dealroom.so/api/public/questions/must-the-insured-business-owner-provide-consent-for-a-company-to-purchase-a-life-insurance","question":"Must the insured business owner provide consent for a company to purchase a life insurance policy on them?","topic":"Business life insurance & protection","audience":"borrower","bot_mode":"buyer","short_answer":"Yes, the explicit written consent of the insured person is almost always legally required for a company to purchase a life insurance policy on them.","rule":"Laws vary by state, but generally, an individual must provide written consent for a third party, including an employer or business partner, to obtain a life insurance policy on their life. This protects against unauthorized policies and privacy invasion.","example":"Before a company can secure a key-person policy on its CFO, the CFO must sign a consent form, typically part of the application process, acknowledging the policy and agreeing to the medical examination.","what_lenders_check":"Lenders expect policies to be legally sound. They assume that proper consent has been obtained, especially if the policy is to be assigned as collateral, as an invalid policy could jeopardize their security interest.","required_facts":["Written consent required","State laws vary","Protects privacy","Part of application process"],"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":"Universal Life Policy","url":"https://dealroom.so/glossary/universal-life-policy"},{"term":"Whole Life Policy","url":"https://dealroom.so/glossary/whole-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/must-the-insured-business-owner-provide-consent-for-a-company-to-purchase-a-life-insurance","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."]}