Why it can come up in acquisitions
A lender may request life insurance on a buyer, guarantor or key person when a business relies on that person and the transaction has limited recoverable collateral. The exact requirement is lender- and transaction-specific.
Build it into the closing timeline
Do not treat insurance as a last-week checklist item. It can require underwriting, policy issue, carrier assignment processing and lender document review. Ask for requirements once the lender raises the condition.
Information to gather
Have the loan details, target close, lender contact, required insured person, coverage amount, policy duration and assignment instructions available before starting. Existing coverage may be usable if the lender accepts it.
Use the SBA insurance closing checklist to prepare.