Why life insurance may be requested
For certain SBA-financed transactions, a lender may request life insurance on a key person or guarantor as part of its collateral and risk-management process. Whether coverage is requested—and the amount, policy type, term and documentation—depends on the specific lender, transaction and borrower circumstances.
Start with the lender’s written requirements
Ask the lending team for the required insured person, amount of coverage, acceptable policy type, assignment instructions and any closing deadline. Do not assume the required coverage equals the entire loan amount. Clear instructions help prevent avoidable rework.
How the process typically moves forward
- Review lender requirements and target closing date.
- Compare available coverage approaches and submit an application.
- Complete carrier underwriting and respond to any requests promptly.
- Coordinate the policy, collateral assignment and evidence of coverage with the lender.
Timing matters
Some applicants may qualify for accelerated underwriting, while other cases require medical, financial or other underwriting review. Starting before the closing window gives the transaction more room to absorb carrier processing time.