{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/who-is-responsible-for-paying-premiums-on-a-business-life-insurance-policy","api_url":"https://dealroom.so/api/public/questions/who-is-responsible-for-paying-premiums-on-a-business-life-insurance-policy","question":"Who is responsible for paying premiums on a business life insurance policy?","topic":"Business life insurance & protection","audience":"borrower","bot_mode":"buyer","short_answer":"The business itself typically pays the premiums for life insurance policies it owns, such as key-person policies or those funding entity-purchase buy-sell agreements.","rule":"When the business is the owner and beneficiary of the policy, it logically assumes responsibility for paying the premiums. These payments are generally made from the company's operating budget. For cross-purchase buy-sell agreements, individual partners would pay premiums on policies they own for other partners.","example":"For a key-person policy on its founder, Acme Corp. pays the $300 monthly premium directly from its corporate bank account.","what_lenders_check":"Lenders verify that premiums are paid consistently to ensure the policy remains in force. They may require proof of payment or even direct deposit arrangements to guarantee coverage.","required_facts":["Business pays","Operating budget","Policy owner's responsibility","Consistent payments","Cross-purchase exception"],"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/who-is-responsible-for-paying-premiums-on-a-business-life-insurance-policy","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."]}