Glossary · The loan itself
Level term policy
In short
A type of life insurance policy where the death benefit and premium remain the same throughout the policy term. It provides predictable coverage.
What it means in a deal
Lenders often require a life insurance policy assigned to them to cover the outstanding loan balance in case of the buyer's death. A level term policy is frequently used because its death benefit doesn't decrease, ensuring the loan is fully covered for a set period.
Official sources
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Level term policy
- Can a term life insurance policy be used for the collateral assignment requirement on an SBA 7(a) loan?
- Is a decreasing term life insurance policy acceptable for the SBA's life insurance requirement on a 7(a) loan?
- Can a term life insurance policy be used for the required collateral assignment on key principals for a 7(a) loan?
- Can a business engaged in multi-level marketing (MLM) be eligible for a 7(a) loan?
- What level of environmental due diligence is required for leasehold improvements only, without real estate acquisition?
- What level of debt service coverage ratio (DSCR) does an SBA 7(a) lender typically look for?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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