SBA 7(a) Q&A
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.
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.
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.
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 “Who owns and is the beneficiary of 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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