{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/who-owns-and-is-the-beneficiary-of-a-key-person-life-insurance-policy","api_url":"https://dealroom.so/api/public/questions/who-owns-and-is-the-beneficiary-of-a-key-person-life-insurance-policy","question":"Who owns and is the beneficiary of a key-person life insurance policy?","topic":"Business life insurance & protection","audience":"borrower","bot_mode":"buyer","short_answer":"Typically, the business itself owns the key-person life insurance policy, pays the premiums, and is named as the beneficiary. This ensures the payout directly benefits the company.","rule":"By owning the policy and being the beneficiary, the business retains control over the policy, including any cash value (if permanent insurance), and receives the death benefit directly. This structure ensures the funds are used to mitigate the business's financial losses rather than going to the individual's estate.","example":"XYZ Corp. takes out a key-person policy on its CEO. XYZ Corp. is listed as the policy owner, premium payer, and sole beneficiary. If the CEO passes away, XYZ Corp. receives the death benefit.","what_lenders_check":"Lenders want clear assurance that the business, as the borrower, will receive the funds to support operations and debt repayment if a key person dies, not an individual's heirs.","required_facts":["Business owns policy","Business pays premiums","Business is beneficiary","Direct payout to company"],"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":"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"},{"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"}],"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":"Key man insurance","url":"https://dealroom.so/glossary/key-man-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/who-owns-and-is-the-beneficiary-of-a-key-person-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."]}