SBA 7(a) Q&A
Short answer
Disability insurance complements life insurance by protecting a business from the financial impact if a key person becomes disabled, whereas life insurance covers death.
While life insurance protects against death, disability insurance provides income replacement or business overhead coverage if a key person becomes unable to work due to illness or injury. This ensures the business can continue operations, cover expenses, or buy out a disabled owner's share without financial strain.
A key salesperson becomes permanently disabled. Their disability insurance pays the business a monthly benefit to cover their salary and recruit a temporary replacement, while their life insurance remains in place for death protection.
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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