Glossary · People and paperwork
Universal Life Policy
In short
A flexible type of permanent life insurance with a cash value component and adjustable premiums and death benefits. It's often required by the SBA to secure a loan on key principals.
What it means in a deal
Similar to a whole life policy, a universal life policy can be assigned to your SBA 7(a) lender to ensure the loan is repaid if a key principal dies. While flexible, lenders generally prefer term life due to its simplicity and lower cost. Expect to complete an Assignment of policy form if using an existing policy.
Official sources
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
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 Universal Life Policy
- Can a lender rely on a universal life insurance policy that has a cash value for a collateral assignment on a 7(a) loan?
- What defines 'insurable interest' for a business life insurance policy?
- Who is responsible for paying premiums on a business life insurance policy?
- Who typically owns the life insurance policy on a seller post-acquisition?
- What is the specific SBA policy document that addresses collateral life insurance requirements?
- Who owns and is the beneficiary of a key-person life insurance policy?
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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