SBA 7(a) Q&A
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.
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.
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.
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 typically owns the life insurance policy on a seller post-acquisition?” 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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