SBA 7(a) Q&A
Short answer
Generally, premiums paid by a business for key-person life insurance are not tax-deductible if the business is the beneficiary, though the death benefit is typically received tax-free.
When a business pays premiums for a life insurance policy where it is the direct beneficiary, these premiums are considered a non-deductible expense for tax purposes. This non-deductibility is balanced by the fact that the death benefit, when paid, is usually received tax-free by the business.
A company pays $15,000 annually in premiums for a key-person life insurance policy on its president. This $15,000 expense cannot be deducted from the company's taxable income, meaning the company's net income for tax calculation purposes is $15,000 higher than if the premium were deductible.
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 “What are the tax implications for a business paying premiums on a key-person 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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