Business Life Insurance – Protect Your Company’s Future

Life insurance isn’t just for families. If you own a business, it can be the key to securing a loan, protecting your partners, rewarding top talent, and ensuring your company’s continuity after a death.

Whether you’re applying for an SBA loan, funding a buy-sell agreement, or offering benefits to retain executives, the right coverage can safeguard everything you’ve built.

In this guide, we help you find the best life insurance companies and underwriting programs to meet your business life insurance needs.

Business life insurance refers to any life insurance policy purchased to protect a business interest. Depending on its structure, the business itself may be the owner, beneficiary, or even the insured.

You can use business life insurance to:

• Fund buy-sell agreements
• Satisfy SBA loan requirements
• Protect key employees or founders
• Secure capital or collateral
• Offer tax-advantaged executive benefits
• Assign the policy to a lender, investor, or a third-party

The company or an individual may own policies, and they can be tailored to cover specific risks, such as business debt or future buyouts.

We’ve broken down the most common use cases into individual guides. Each one explains how underwriting works, what coverage to consider, and how to avoid common mistakes.

If you’re applying for an SBA loan, the SBA requires life insurance for the principal(s). However, not all policies meet the SBA 7(a) or 504 loan guidelines.

This guide covers:

• SBA’s life insurance rules
• Approval timelines
• Collateral assignment tips

Protect your company from financial loss in the event of an unexpected death of a key executive, partner, or employee with key person life insurance.

This article explains:

• Coverage amounts
• Who owns the policy
• How to structure it tax-efficiently

Ensure ownership transfers smoothly when a partner dies or exits, without draining business cash or incurring debt. Buy-sell life insurance helps you accomplish this.

Learn about:

• Cross-purchase vs. entity agreements
• Coverage Strategies
• Common valuation pitfalls

If you’re a non-U.S. citizen who owns or invests in a U.S. business, you can still qualify for foreign national life insurance, often without a Social Security number.

In this guide:

• Visa and residency requirements
• Carrier guidelines
• Best products for non-residents

Lenders or buyers may require you to assign your policy for collateral or contractual protection.

You’ll learn:

• How assignments work
• Which forms do you need
• Common pitfalls to avoid

An executive bonus plan allows the business to pay a tax-deductible bonus to fund life insurance owned by the employee. The employee pays income tax on the bonus but receives permanent coverage with tax-deferred cash value that can supplement retirement. This strategy offers:

For the business:

• Selective participation
• Immediate tax deduction for the bonus
• No IRS approval or ERISA rules

For the employee:

• Personally owned policy
• Tax-deferred growth
• Potential retirement income
• Policies with riders, such as living benefits

Premium finance allows high-net-worth individuals or businesses to borrow money from a third-party lender to fund significant life insurance policies without having to liquidate their assets.

It’s a strategy for:

• Business owners with illiquid assets
• Investors avoiding capital gains
• High-income earners maxed out on retirement plans

Key risks:

• Rising interest rates
• Collateral requirements
• Policy performance

A Section 303 stock redemption plan enables a business to utilize life insurance proceeds to repurchase a deceased shareholder’s stock from their estate, thereby avoiding ordinary income tax.

Why it matters:

• Helps pay estate taxes
• Keeps business in the family
• Preserves capital gains treatment

If your business owns a policy on an employee or owner, special rules apply. Under the Pension Protection Act of 2006, death benefits may be taxable unless you:

• Obtain written notice and consent from the employee before the policy is issued
• File IRS Form 8925 annually
• Meet specific employee status or beneficiary safe harbors

In addition to the above, check out these options.

Replaces group term life coverage above $50,000 with individual permanent policies for select executives. Often combined with executive bonus or split-dollar arrangements.

The business owns the policy and allows the employee to designate a beneficiary for a portion of the death benefit. The business recovers its costs; the employee is taxed on the “economic benefit.”

The employee owns the policy, and the business pays premiums as a loan secured by the policy. The business is repaid upon the retiree’s or deceased’s death.

Use Case	Best Policy Type	Typical Term
SBA Loan Requirement	Stock-Redemption Plans	Match loan term
Key Person Protection	Term or Universal Life Insurance	10–20 years
Buy-Sell Agreements	Term, GUL, or Whole Life	Long-term or permanent
Executive Bonus Plans	Indexed Universal Life or Whole Life	Permanent
Collateral Assignment	Term or GUL	Varies
Foreign Nationals	Term, GUL, or IUL	Based on objective
Stock Redemption Plans	Whole Life or GUL	Permanent
Premium Finance	IUL or Whole Life	Permanent

Here’s how to streamline your business life insurance application:

• Use a business-savvy agent. Many policies get delayed due to poor structuring or lender miscommunication.
• Prepare financials. Have your tax returns, profit and loss statements (P&Ls), and cap tables ready.
• Clarify ownership. Know who will own and benefit from the policy.
• Follow EOLI rules. Get written consent and file the required IRS forms.
• Choose the right carrier. Some insurers specialize in high-net-worth or business-focused underwriting.

Business life insurance isn’t one-size-fits-all, but it’s one of the most innovative ways to protect your company, your partners, and your future. Whether you need coverage for a loan, a succession plan, an executive benefit, or a capital strategy, the right policy can support your goals.

Explore the detailed guides above to learn more, or request a quote today.