Replacing a Collaterally Assigned, Incontestable Life Policy

[Chicken Coop]

I will be meeting with a prospect soon who has an existing five year old term policy assigned to a bank to cover a loan.

Can this policy be replaced with a new one (with lower rates) without any issues from the bank?

I am referring to a new contract opening up a new two year contestability window.

Will the bank flip out over this?

Any other factors I should consider?

 

[BNTRS]

I will be meeting with a prospect soon who has an existing five year old term policy assigned to a bank to cover a loan. Can this policy be replaced with a new one (with lower rates) without any issues from the bank? I am referring to a new contract opening up a new two year contestability window. Will the bank flip out over this? Any other factors I should consider?

Maybe, it's totally up to the bank. If this was assigned "correctly" then the bank is an irrevocable beneficiary and must agree to the replacement. So you'll likely need to loop in someone at the bank through this process. Not impossible, but a little more to do

 

[Gooner]

Maybe it's totally up to the bank. If this was assigned "correctly" then the bank is an irrevocable beneficiary and must agree to the replacement.

So you'll likely need to loop in someone at the bank through this process.

Not impossible, but a little more to do

Yes sir...depending on the banker it should be very quick and easy. I had to do it earlier this year for my wives SBA loan. My only recommendation would be to get the new policy approved and then walk into the bank with the assignment paperwork...for the new policy and to cancel the other one

 

[tlmarketing]

I will be meeting with a prospect soon who has an existing five year old term policy assigned to a bank to cover a loan.

Can this policy be replaced with a new one (with lower rates) without any issues from the bank?

I am referring to a new contract opening up a new two year contestability window.

Will the bank flip out over this?

Any other factors I should consider?

It's not a problem at all. I write many business owners and work with banks all the time. As gooner mentioned...get the new policy in place, and then approach bank to put the new collateral assignment in place. I've never had a problem with this approach, and banks don't care as long as their assignment is in place. Once complete, cancel the existing policy.

 

[LottieGarza]

No, I don't think it is difficult. It is totally depend on the banker. He can easily replace the old policy with the new one.