{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/who-typically-owns-the-life-insurance-policy-on-a-seller-post-acquisition","api_url":"https://dealroom.so/api/public/questions/who-typically-owns-the-life-insurance-policy-on-a-seller-post-acquisition","question":"Who typically owns the life insurance policy on a seller post-acquisition?","topic":"Business life insurance & protection","audience":"borrower","bot_mode":"buyer","short_answer":"The buyer or the acquired business typically owns the life insurance policy on the seller, and they are usually the beneficiary, especially if there is an outstanding seller note.","rule":"For the policy to protect the buyer's interests (e.g., against an outstanding seller note or loss of transitional support), the buyer or the acquired entity must own the policy and be the beneficiary. This ensures the funds directly mitigate their financial risk.","example":"ABC Inc. acquires XYZ Co. and has a $300,000 seller note. ABC Inc. purchases a $300,000 term policy on the seller for the note's duration, owning the policy and being the beneficiary.","what_lenders_check":"Lenders want clear ownership and beneficiary designation, ensuring that the party with the financial exposure (the buyer/borrower) receives the death benefit to protect the business and its ability to repay the loan.","required_facts":["Buyer owns policy","Business owns policy","Buyer is beneficiary","Protects buyer's investment"],"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-typically-owns-the-life-insurance-policy-on-a-seller-post-acquisition","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."]}