SBA 7(a) Q&A
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.
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.
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.
Last reviewed 2026-06-15 · SBA sources checked through 2026-06-15. DealRoom analysis of business life-insurance and SBA collateral-insurance practice (SOP 50 10 8). Not insurance, legal, or tax advice. Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
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This page answers “For general business protection, should the business or individual owners own the life insurance policy?” for SBA 7(a) business buyers — a short answer, the detail, and official sources — from DealRoom.so SBA Intelligence. It is general information, not legal, tax, or financial advice, and DealRoom is not a lender.
Source: DealRoom.so SBA Intelligence, based on public SBA, lender, franchise, FDIC, and related records. DealRoom is not a lender and does not guarantee financing.
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