Life Insurance Companies For Collateral Assignment

[NinjaBonkai]

Hello I am new to Life Insurance, and I was thinking of using a life insurance policy as collateral assignment for a loan. I was wondering what companies does anyone know that I can look into that a lender would take as collateral for a loan. I am wanted to get advice that I am using a collateral assignment for a loan would I get a whole life or permanent life insurance policy or a different type of policy. Also which company would quickly be able to do the collateral assignment. I just wanted to be sure.

 

[Tahoe Ray]

Hello I am new to Life Insurance, and I was thinking of using a life insurance policy as collateral assignment for a loan. I was wondering what companies does anyone know that I can look into that a lender would take as collateral for a loan. I am wanted to get advice that I am using a collateral assignment for a loan would I get a whole life or permanent life insurance policy or a different type of policy. Also which company would quickly be able to do the collateral assignment. I just wanted to be sure.

Most companies will do it.

Collateral for a loan is different than a collateral assignment. Collateral for a loan would imply that you're pledging cash values to secure the loan (at least the way I'm reading it) whereas collateral assignment is assigning the death benefit to the lender if you drop dead still owing the money.

Often, collateral assignments for loans are term policies that match the loan terms. You could of course use other policies but you'd want to have a need for the insurance beyond the loan itself if you went that route.

I've done several of these. My most recent one was with Banner. It took them about a week for them to record the assignment (which we sent in once the policy was in force).

 

[LeadWolf44]

I work for Mutual of Omaha and they do. I work in b2b sales and often work with SBA lenders that require collateral assignments. The most current one is liftfund

 

[ATM]

I don't know of an insurance company that does not have collateral assignment forms readily available.

 

[PrivClientSG]

Hello I am new to Life Insurance, and I was thinking of using a life insurance policy as collateral assignment for a loan. I was wondering what companies does anyone know that I can look into that a lender would take as collateral for a loan. I am wanted to get advice that I am using a collateral assignment for a loan would I get a whole life or permanent life insurance policy or a different type of policy. Also which company would quickly be able to do the collateral assignment. I just wanted to be sure.

I am not quite sure what you are asking. Virtually every life insurance company uses a collateral assignment form. The ABA used to have their own standardized collateral assignment form. It can be used for a variety of reasons. A common one is when a bank requires the death benefit (or a portion of) to be assigned to the bank to secure a loan. Simple.

Now, are you asking what companies policies will a lender accept as collateral for a loan -- against the cash value? If so, there are many banks that will give a policy owner a "line of credit" with the cash value being assigned as collateral -- most often with whole life. In this case, the cash value stays inside the policy, and it is simply "assigned" to the lender to secure the line of credit. It's pledged to the bank so that the line of credit is secured. All banks who do this have requirements -- minimum rating (A and up), mutual company, minimum amount, etc. There are plenty of banks that do this. The big mutual companies are the most common -- Guardian, Mass Mutual, NY Life, Northwestern, and others. I've done with whole life policies I own. Hope this answers your questions.

 

[Nurse D]

Most companies will do it.

Collateral for a loan is different than a collateral assignment. Collateral for a loan would imply that you're pledging cash values to secure the loan (at least the way I'm reading it) whereas collateral assignment is assigning the death benefit to the lender if you drop dead still owing the money.

Often, collateral assignments for loans are term policies that match the loan terms. You could of course use other policies but you'd want to have a need for the insurance beyond the loan itself if you went that route.

I've done several of these. My most recent one was with Banner. It took them about a week for them to record the assignment (which we sent in once the policy was in force).

When you say you’ve done several of these, do you mean you have worked with clients who have successfully done a collateral assignment with a term life policy from Banner? I have a term life policy with Banner and have been looking for a bank, etc that will take my policy as collateral for a non-business loan. Can you advise?

 

[Tahoe Ray]

When you say you’ve done several of these, do you mean you have worked with clients who have successfully done a collateral assignment with a term life policy from Banner? I have a term life policy with Banner and have been looking for a bank, etc that will take my policy as collateral for a non-business loan. Can you advise?

Yes but I've only done them for business loans like SBA.

 

[PrivClientSG]

When you say you’ve done several of these, do you mean you have worked with clients who have successfully done a collateral assignment with a term life policy from Banner? I have a term life policy with Banner and have been looking for a bank, etc that will take my policy as collateral for a non-business loan. Can you advise?

For a term policy, each bank will make their own decision as to whether they will accept the policy as collateral for the loan. Case by case, specifics determine. I had one recently where the loan was for $40mm, three banks, 10 year loan, matching terms and conditions. The banks would not accept 10 year term. Why? Each loan had a provision that could, possibly, under certain circumstances, extend the loan beyond 10 years. Even if they didn't, what happens if the client can't refinance the loan. The bank has no choice but to extend, and then they are extending without coverage collateralizing the loan. Also, remember, in your case, this is not non-recourse. They will go after the borrower. Cross-collateralization could be a factor as well. There's a lot of factors here. Good luck!