collateral assignment

Collateral assignment of your life insurance policy can help you get approved for a loan. Learn how it works, how it impacts your policy, and alternatives to consider.

A collateral assignment of life insurance is a method of securing a loan by using a life insurance policy as collateral. If you pass away before the loan is repaid, the...

Collateral assignment enables you to use your life insurance as collateral for a loan. This allows you to be approved for a loan if you don’t want to put your other assets at risk. Here is how collateral assignment loans work, as well as the pros and cons and alternatives to collateral assignment.

Collateral assignment is an additional agreement to your life insurance policy that gives a lender first claim to your life insurance payout, but lets you name beneficiaries who can claim any money left over after the loan is paid.

Collateral assignment of life insurance lets you use a life insurance policy as an asset to secure a loan. If you die while the policy is in place and still owe money on the loan, the death benefit goes to pay off the remaining debt.

Collateral assignment concerns allocating a property's ownership privileges, or a specific interest, to a lender as loan collateral. The lender retains a security interest in the asset until the borrower entirely settles the loan.

Under a collateral assignment, the policyholder retains ownership of the policy and continues to pay the premiums. The assignee, typically the lender, receives the right to the policy’s cash value or death benefit as a means of recovering the outstanding debt in the event of default.

Collateral assignment of life insurance is an arrangement where a policyholder uses the face value of their life insurance policy, which can be a term or permanent life insurance policy, as collateral to secure a loan.