Compensation Glossary

Collateral Assignment

This is when someone designates a policy’s death benefit OR cash surrender value TO a creditor AS security WHEN applying FOR a loan. IF the loan does NOT get repaid, the policy proceeds go TO the creditor up TO the outstanding loan’s balance. The policy’s beneficiary receives the remainder. Life insurance IS acceptable security TO lenders because it IS freely assignable.The lender IS guaranteed the money IF the borrower dies before repaying the loan.