Collateral Assignment

Jump to section.

A collateral assignment involves granting a security interest in the asset or property to a lender. It is a lawful arrangement where the borrower promises an asset or property to the lender to guarantee the debt repayment or meet a financial obligation. Moreover, in a collateral assignment, the borrower maintains asset ownership, the lender holds the security interest, and the lender has the right to seize and sell the asset in event of default. This blog post will discuss a collateral assignment, its purpose, essential considerations, and more.

Key Purposes of a Collateral Assignment

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. If the borrower defaults on loan settlement, the lender can seize and market the collateral to recover the unpaid debt. Below are the key purposes of a collateral assignment.

  • Enhanced Lender Protection: The primary purpose of the collateral assignment is to provide lenders with an added layer of security and assurance. Also, by maintaining a claim on the borrower's properties, lenders lower their risk and improve the probability of loan settlement. In case of default, the lender can sell the collateral to recover the unpaid balance. This security authorizes lenders to offer loans with lower interest rates, as the threat associated with the loan is reduced.
  • Favorable Loan Terms: Collateral assignment allows borrowers to access financing on more favorable terms than unsecured loans . However, the terms of the loan will vary depending on the borrower’s creditworthiness and the value of the collateral. Generally, lenders are more willing to extend larger loan amounts and lower interest rates when they have collateral to fall back on. The presence of collateral reassures lenders that they have a viable means of recouping their investment, even in case of default. This increased confidence often leads to more competitive loan offers for borrowers.
  • Unlocking Asset Value: Collateral assignment enables borrowers to leverage the value of their assets, even if those assets are not readily convertible into cash. For instance, a business owner with valuable machinery can assign it as collateral to secure a business loan. This arrangement allows the borrower to continue utilizing the asset for operational purposes while accessing the necessary funds for expansion or working capital. Collateral assignment, thus, enables the efficient allocation of resources. However, the collateral will still be considered in determining the loan amount and terms.
  • Access to Higher Loan Amounts: When borrowers promise collateral against a loan, lenders can present greater loan amounts than for other unsecured loans. The worth of the collateral serves as a reassurance to lenders that they can recover their investment even if the borrower fails to settle the loan. Therefore, borrowers can obtain higher loans to finance important endeavors such as purchasing property, starting a business, or funding major projects.
  • Diversification of Collateral: Collateral assignment offers flexibility for borrowers by allowing them to diversify their collateral base. While real estate is commonly used as collateral, borrowers can utilize other valuable assets such as investment portfolios, life insurance policies, or valuable personal belongings. This diversification allows borrowers to access financing without limiting themselves to a single asset, thereby preserving their financial flexibility.

Steps to Execute a Collateral Assignment

A collateral assignment is a financial procedure that involves utilizing an asset as security for a loan or other responsibilities. Below are the essential steps involved in the collateral assignment process.

  • Assess the Need for Collateral Assignment. The initial step in collateral assignment is determining whether collateral is necessary. Lenders or creditors may require collateral to mitigate the risk of default or ensure repayment. Evaluating the value and marketability of the proposed collateral is crucial to ascertain if it meets the lender's requirements.
  • Select Appropriate Collateral. The next step involves choosing a suitable asset for collateral assignment. Common classifications of collateral comprise stocks, real estate, bonds, cash deposits, and other valuable assets. The collateral's value should be sufficient to cover the loan amount or the obligation being secured.
  • Understand Lawful and Regulatory Requirements. Before proceeding with collateral assignment, it is essential to comprehend the lawful and regulatory provisions specific to the jurisdiction where the transaction happens. Collateral assignment laws can vary, so seeking advice from legal professionals experienced in this area is advisable to ensure compliance.
  • Negotiate Provisions. Once the collateral is recognized, the collateral assignment provisions must be negotiated among the concerned parties. It includes specifying the loan amount, interest rates, repayment terms, and any further duties or limitations associated with the collateral assignment.
  • Prepare the Collateral Assignment Agreement. The collateral assignment agreement is a lawful document that typically includes details about the collateral, the loan or obligation being secured, and the rights and responsibilities of both parties. It is highly advised to engage the services of a legal specialist to prepare or review the contract.
  • Enforce the Collateral Assignment Agreement. After completing the collateral assignment agreement, it must be executed by all involved parties. This step ensures that all necessary signatures are obtained and copies of the agreement are distributed to each individual for record-keeping objectives.
  • Notify Relevant Parties. To ensure proper recognition and recording of the collateral assignment, it is important to notify all relevant parties. It may involve informing the lender or creditor, the custodian or holder of the collateral, and any other pertinent stakeholders. Sufficient documentation and communication will help prevent potential disputes or misunderstandings.
  • Record the Collateral Assignment. Depending on the nature of the collateral, it may be necessary to record the collateral assignment with the appropriate government authority or registry. This step provides public notice of the assignment and establishes priority rights in case of multiple claims on the same collateral. Seeking guidance from legal professionals or relevant authorities can determine if recording the collateral assignment is required.
  • Monitor and Maintain the Collateral. Throughout the collateral assignment term, it is crucial to monitor and maintain the value and condition of the collateral. This includes ensuring insurance coverage, property maintenance, and compliance with any ongoing obligations associated with the collateral. Regular communication between all parties involved is essential to address concerns or issues promptly.
  • Terminate the Collateral Assignment. Once the loan or obligation secured by the collateral is fully satisfied, the collateral assignment can be terminated. This involves releasing the collateral from the assignment, updating relevant records, and notifying all parties involved. It is important to follow proper procedures to ensure the appropriate handling of the legal and financial aspects of the termination.

how to do collateral assignment

Key Terms for Collateral Assignments

  • Security Interest: It is the legal right granted to a lender over the assigned collateral to protect their interests in case of borrower default.
  • Collateral Valuation: The process of determining the worth or market value of the assigned collateral to assess its adequacy in securing the loan.
  • Release of Collateral: The action taken by a lender to relinquish its claim over the assigned collateral after the borrower has fulfilled the loan obligations.
  • Subordination Agreement : A legal document that establishes the priority of multiple creditors' claims over the same collateral, typically in the case of refinancing or additional loans.
  • Lien : A legal claim or encumbrance on a property or asset, typically created through a collateral assignment, that allows a lender to seize and sell the collateral to recover the loan amount.

Final Thoughts on Collateral Assignments

A collateral assignment is a valuable instrument for borrowers and lenders in securing loans or obligations. It offers borrowers access to profitable terms and more extensive loan amounts while reducing the risk for lenders. Nevertheless, it is essential for borrowers to thoughtfully assess the terms and threats associated with collateral assignment before proceeding. Seeking professional guidance and understanding the contract can help ensure a successful and beneficial financial arrangement for all parties involved.

If you want free pricing proposals from vetted lawyers that are 60% less than typical law firms, click here to get started. By comparing multiple proposals for free, you can save the time and stress of finding a quality lawyer for your business needs.

Meet some of our Collateral Assignment Lawyers

Mark D. on ContractsCounsel

Partnering with business clients to keep their greatest asset - their employees - from becoming their biggest liability. Mark accomplishes this by working with in-house counsel and human resource professionals of several Fortune 50 companies, as well as many smaller public and privately held profit and not for profit organizations, to provide advice and counsel on the day to day employment and workforce practice issues encountered by those organizations. For over fifteen years Mark has been Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization. He is licensed and practices in both Texas and Colorado and has focused his practice for the last 20 plus years on defending companies in employment and labor related matters. During this time Mark has had extensive experience in handling and responding to a wide range of local, state and federal employment issues that impact the management and operations of businesses in a wide range of industries. Mark's experience includes appearances before state and federal agencies and regulatory boards, litigation in both state and federal courts, defense of class actions and appearances before courts of appeal. While Mark regularly handles matters in litigation, he has a high regard for handling every issue with the best interest of the client’s business. Mark is a published author and regular speaks on labor, employment and workplace practice topics. Whether it be an investigation by the Occupational Safety and Health Administration (OSHA), the Wage & Hour division of the U.S. Department of Labor, or other state agency; an Equal Employment Opportunity Commission (EEOC) or state agency charge claiming a violation of local, state or federal employment or labor laws; or the need for direction on a hiring, termination or business operational issue involving employees, Mark has extensive experience in handling these and many other employment and labor issues.

Rebecca R. on ContractsCounsel

An experienced commercial contracts attorney with sales, leasing, NDA, SEC compliance, corporate governance, commercial real estate, and employment experience. Also well versed in internal and external policy document and manual creation.

Gregory F. on ContractsCounsel

Greg Fidlon has been practicing exclusively in employment law since 1998. He represents and advises clients in all aspects of the employment relationship. In addition to his litigation work, Greg regularly negotiates and drafts corporate policy handbooks, employment contracts, separation agreements and restrictive covenants. He also develops and presents training programs and has spoken and written extensively on labor and employment law topics.

Sunnita B. on ContractsCounsel

Experienced sports and entertainment attorney. I specialize in contracts, business formation, licensing, wage disputes, negotiations, and intellectual property.

Joann H. on ContractsCounsel

I practiced law for the past 22 years in Immigration, Bankruptcy, Foreclosure, Civil Litigation, and Estate Planning. I am interested in downsizing to a more workable schedule to allow the pursuit of other interests.

Pankaj R. on ContractsCounsel

I advise clients in the areas of business, trademarks, real estate, employment, and finance. My overarching goals are to unite creative people and companies to assist them in making sound legal and business decisions. I have been fortunate enough to build a fast-growing, 21st-century law firm with an amazing staff by my side. Our focus is not just on providing invaluable legal insight but creating a better all-around client experience. We provide unique subscription pricing and flat-fee options for our clients, providing billing transparency and enhanced value to all of our wonderful clients. Focus areas: contract drafting, negotiations, research, trademarks international law, entertainment, business development, entity choice; business: manager, team builder, leader, motivator. Speaking Engagements: National Business Institute (NBI) - "Business Contracts 101"

Neilson B. on ContractsCounsel

Let us discuss your plans.

Find the best lawyer for your project

How it works.

Post Your Project

Get Free Bids to Compare

Hire Your Lawyer

Collateral Assignment lawyers by city

  • Austin Collateral Assignment Lawyers
  • Boston Collateral Assignment Lawyers
  • Chicago Collateral Assignment Lawyers
  • Dallas Collateral Assignment Lawyers
  • Denver Collateral Assignment Lawyers
  • Houston Collateral Assignment Lawyers
  • Los Angeles Collateral Assignment Lawyers
  • New York Collateral Assignment Lawyers
  • Phoenix Collateral Assignment Lawyers
  • San Diego Collateral Assignment Lawyers
  • Tampa Collateral Assignment Lawyers

related contracts

  • Accredited Investor Questionnaire
  • Adverse Action Notice
  • Bridge Loan
  • Bridge Loan Contract
  • Commercial Loan
  • Convertible Bonds
  • Convertible Note
  • Convertible Preferred Stock
  • Cumulative Preferred Stock
  • Custodial Agreement

other helpful articles

  • How much does it cost to draft a contract?
  • Do Contract Lawyers Use Templates?
  • How do Contract Lawyers charge?
  • Business Contract Lawyers: How Can They Help?
  • What to look for when hiring a lawyer

how to do collateral assignment

Quick, user friendly and one of the better ways I've come across to get ahold of lawyers willing to take new clients.

Contracts Counsel was incredibly helpful and easy to use. I submitted a project for a lawyer's help within a day I had received over 6 proposals from qualified lawyers. I submitted a bid that works best for my business and we went forward with the project.

I never knew how difficult it was to obtain representation or a lawyer, and ContractsCounsel was EXACTLY the type of service I was hoping for when I was in a pinch. Working with their service was efficient, effective and made me feel in control. Thank you so much and should I ever need attorney services down the road, I'll certainly be a repeat customer.

I got 5 bids within 24h of posting my project. I choose the person who provided the most detailed and relevant intro letter, highlighting their experience relevant to my project. I am very satisfied with the outcome and quality of the two agreements that were produced, they actually far exceed my expectations.

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Find lawyers and attorneys by city

  • Search Search Please fill out this field.
  • Life Insurance
  • Definitions

What Is a Collateral Assignment of Life Insurance?

how to do collateral assignment

Charlene Rhinehart is a CPA , CFE, chair of an Illinois CPA Society committee, and has a degree in accounting and finance from DePaul University.

how to do collateral assignment

A collateral assignment of life insurance is a conditional assignment appointing a lender as an assignee of a policy. Essentially, the lender has a claim to some or all of the death benefit until the loan is repaid. The death benefit is used as collateral for a loan.

The advantage to using a collateral assignee over naming the lender as a beneficiary is that you can specify that the lender is only entitled to a certain amount, namely the amount of the outstanding loan. That would allow your beneficiaries still be entitled to any remaining death benefit.

Lenders commonly require that life insurance serve as collateral for a business loan to guarantee repayment if the borrower dies or defaults. They may even require you to get a life insurance policy to be approved for a business loan.

Key Takeaways

  • The borrower of a business loan using life insurance as collateral must be the policy owner, who may or may not be the insured.
  • The collateral assignment helps you avoid naming a lender as a beneficiary.
  • The collateral assignment may be against all or part of the policy's value.
  • If any amount of the death benefit remains after the lender is paid, it is distributed to beneficiaries.
  • Once the loan is fully repaid, the life insurance policy is no longer used as collateral.

How a Collateral Assignment of Life Insurance Works

Collateral assignments make sure the lender gets paid only what they are due. The borrower must be the owner of the policy, but they do not have to be the insured person. And the policy must remain current for the life of the loan, with the policy owner continuing to pay all premiums . You can use either term or whole life insurance policy as collateral, but the death benefit must meet the lender's terms.

A permanent life insurance policy with a cash value allows the lender access to the cash value to use as loan payment if the borrower defaults. Many lenders don't accept term life insurance policies as collateral because they do not accumulate cash value.

Alternately, the policy owner's access to the cash value is restricted to protect the collateral. If the loan is repaid before the borrower's death, the assignment is removed, and the lender is no longer the beneficiary of the death benefit.

Insurance companies must be notified of the collateral assignment of a policy. However, other than their obligation to meet the terms of the contract, they are not involved in the agreement.

Example of Collateral Assignment of Life Insurance

For example, say you have a business plan for a floral shop and need a $50,000 loan to get started. When you apply for the loan, the bank says you must have collateral in the form of a life insurance policy to back it up. You have a whole life insurance policy with a cash value of $65,000 and a death benefit of $300,000, which the bank accepts as collateral.

So, you then designate the bank as the policy's assignee until you repay the $50,000 loan. That way, the bank can ensure it will be repaid the funds it lent you, even if you died. In this case, because the cash value and death benefit is more than what you owe the lender, your beneficiaries would still inherit money.

Alternatives to Collateral Assignment of Life Insurance

Using a collateral assignment to secure a business loan can help you access the funds you need to start or grow your business. However, you would be at risk of losing your life insurance policy if you defaulted on the loan, meaning your beneficiaries may not receive the money you'd planned for them to inherit.

Consult with a financial advisor to discuss whether a collateral assignment or one of these alternatives may be most appropriate for your financial situation.

Life insurance loan (policy loan) : If you already have a life insurance policy with a cash value, you can likely borrow against it. Policy loans are not taxed and have less stringent requirements such as no credit or income checks. However, this option would not work if you do not already have a permanent life insurance policy because the cash value component takes time to build.

Surrendering your policy : You can also surrender your policy to access any cash value you've built up. However, your beneficiaries would no longer receive a death benefit.

Other loan types : Finally, you can apply for other loans, such as a personal loan, that do not require life insurance as collateral. You could use loans that rely on other types of collateral, such as a home equity loan that uses your home equity.

What Are the Benefits of Collateral Assignment of Life Insurance?

A collateral assignment of a life insurance policy may be required if you need a business loan. Lenders typically require life insurance as collateral for business loans because they guarantee repayment if the borrower dies. A policy with cash value can guarantee repayment if the borrower defaults.

What Kind of Life Insurance Can Be Used for Collateral?

You can typically use any type of life insurance policy as collateral for a business loan, depending on the lender's requirements. A permanent life insurance policy with a cash value allows the lender a source of funds to use if the borrower defaults. Some lenders may not accept term life insurance policies, which have no cash value. The lender will typically require the death benefit be a certain amount, depending on your loan size.

Is Collateral Assignment of Life Insurance Irrevocable?

A collateral assignment of life insurance is irrevocable. So, the policyholder may not use the cash value of a life insurance policy dedicated toward collateral for a loan until that loan has been repaid.

What is the Difference Between an Assignment and a Collateral Assignment?

With an absolute assignment , the entire ownership of the policy would be transferred to the assignee, or the lender. Then, the lender would be entitled to the full death benefit. With a collateral assignment, the lender is only entitled to the balance of the outstanding loan.

The Bottom Line

If you are applying for life insurance to secure your own business loan, remember you do not need to make the lender the beneficiary. Instead you can use a collateral assignment. Consult a financial advisor or insurance broker who can walk you through the process and explain its pros and cons as they apply to your situation.

Progressive. " Collateral Assignment of Life Insurance ."

Fidelity Life. " What Is a Collateral Assignment of a Life Insurance Policy? "

Kansas Legislative Research Department. " Collateral Assignment of Life Insurance Proceeds ."

how to do collateral assignment

  • Terms of Service
  • Editorial Policy
  • Privacy Policy
  • Your Privacy Choices
  • Search Search Please fill out this field.
  • Life Insurance

What Is Collateral Assignment (of a Life Insurance Policy)?

Meredith Mangan is a senior editor for The Balance, focusing on insurance product reviews. She brings to the job 15 years of experience in finance, media, and financial markets. Prior to her editing career, Meredith was a licensed financial advisor and a licensed insurance agent in accident and health, variable, and life contracts. Meredith also spent five years as the managing editor for Money Crashers.

how to do collateral assignment

Definition and Examples of Collateral Assignment

How collateral assignment works, alternatives to collateral assignment.

Kilito Chan / Getty Images

If you assign your life insurance contract as collateral for a loan, you give the lender the right to collect from the policy’s cash value or death benefit in two circumstances. One is if you stop making payments; the other is if you die before the loan is repaid. Securing a loan with life insurance reduces the lender’s risk, which improves your chances of qualifying for the loan.

Before moving forward with a collateral assignment, learn how the process works, how it impacts your policy, and possible alternatives.

Collateral assignment is the practice of using a life insurance policy as collateral for a loan . Collateral is any asset that your lender can take if you default on the loan.

For example, you might apply for a $25,000 loan to start a business. But your lender is unwilling to approve the loan without sufficient collateral. If you have a permanent life insurance policy with a cash value of $40,000 and a death benefit of $300,000, you could use that life insurance policy to collateralize the loan. Via collateral assignment of your policy, you authorize the insurance company to give the lender the amount you owe if you’re unable to keep up with payments (or if you die before repaying the loan).

Lenders have two ways to collect under a collateral assignment arrangement:

  • If you die, the lender gets a portion of the death benefit—up to your remaining loan balance.
  • With permanent insurance policies, the lender can surrender your life insurance policy in order to access the cash value if you stop making payments.

Lenders are only entitled to the amount you owe, and are not generally named as beneficiaries on the policy. If your cash value or the death benefit exceeds your outstanding loan balance, the remaining money belongs to you or your beneficiaries.

Whenever lenders approve a loan, they can’t be certain that you’ll repay. Your credit history is an indicator, but sometimes lenders want additional security. Plus, surprises happen, and even those with the strongest credit profiles can die unexpectedly.

Assigning a life insurance policy as collateral gives lenders yet another way to secure their interests and can make approval easier for borrowers.

Types of Life Insurance Collateral

Life insurance falls into two broad categories: permanent insurance and term insurance . You can use both types of insurance for a collateral assignment, but lenders may prefer that you use permanent insurance.

  • Permanent insurance : Permanent insurance, such as universal and whole life insurance, is lifelong insurance coverage that contains a cash value. If you default on the loan, lenders can surrender your policy and use that cash value to pay down the balance. If you die, the lender has a right to the death benefit, up to the amount you still owe.
  • Term insurance : Term insurance provides a death benefit, but coverage is limited to a certain number of years (20 or 30, for example). Since there’s no cash value in these policies, they only protect your lender if you die before the debt is repaid. The duration of a term policy used as collateral needs to be at least as long as your loan term.

A Note on Annuities

You may also be able to use an annuity as collateral for a bank loan. The process is similar to using a life insurance policy, but there is one key difference to be aware of. Any amount assigned as collateral in an annuity is treated as a distribution for tax purposes. In other words, the amount assigned will be taxed as income up to the amount of any gain in the contract, and may be subject to an additional 10% tax if you’re under 59 ½.

A collateral assignment is similar to a lien on your home . Somebody else has a financial interest in your property, but you keep ownership of it.

The Process

To use life insurance as collateral, the lender must be willing to accept a collateral assignment. When that’s the case, the policy owner, or “assignor,” submits a form to the insurance company to establish the arrangement. That form includes information about the lender, or “assignee,” and details about the lender’s and borrower’s rights.

Policy owners generally have control over policies. They may cancel or surrender coverage, change beneficiaries, or assign the contract as collateral. But if the policy has an irrevocable beneficiary, that beneficiary will need to approve any collateral assignment.

State laws typically require you to notify the insurer that you intend to pledge your insurance policy as collateral, and you must do so in writing. In practice, most insurers have specific forms that detail the terms of your assignment.

Some lenders might require you to get a new policy to secure a loan, but others allow you to add a collateral assignment to an existing policy. After submitting your form, it can take 24 to 48 hours for the assignment to go into effect.

Lenders Get Paid First

If you die and the policy pays a death benefit , the lender receives the amount you owe first. Your beneficiaries get any remaining funds once the lender is paid. In other words, your lender takes priority over your beneficiaries when you use this strategy. Be sure to consider the impact on your beneficiaries before you complete a collateral assignment.

After you repay your loan, your lender does not have any right to your life insurance policy, and you can request that the lender release the assignment. Your life insurance company should have a form for that. However, if a lender pays premiums to keep your policy in force, the lender may add those premium payments (plus interest) to your total debt—and collect that extra money.

There may be several other ways for you to get approved for a loan—with or without life insurance:

  • Surrender a policy : If you have a cash value life insurance policy that you no longer need, you could potentially surrender the policy and use the cash value. Doing so might prevent the need to borrow, or you might borrow substantially less. However, surrendering a policy ends your coverage, meaning your beneficiaries will not get a death benefit. Also, you’ll likely owe taxes on any gains.
  • Borrow from your policy : You may be able to borrow against the cash value in your permanent life insurance policy to get the funds you need. This approach could eliminate the need to work with a traditional lender, and creditworthiness would not be an issue. But borrowing can be risky, as any unpaid loan balance reduces the amount your beneficiaries receive. Plus, over time, deductions for the cost of insurance and compounding loan interest may negate your cash value and the policy could lapse, so it’s critical to monitor.
  • Consider other solutions : You may have other options unrelated to a life insurance policy. For example, you could use the equity in your home as collateral for a loan, but you could lose your home in foreclosure if you can’t make the payments. A co-signer could also help you qualify, although the co-signer takes a significant risk by guaranteeing your loan.

Key Takeaways

  • Life insurance can help you get approved for a loan when you use a collateral assignment.
  • If you die, your lender receives the amount you owe, and your beneficiaries get any remaining death benefit.
  • With permanent insurance, your lender can cash out your policy to pay down your loan balance.
  • An annuity can be used as collateral for a loan but may not be a good idea because of tax consequences.
  • Other strategies can help you get approved without putting your life insurance coverage at risk.

NYSBA. " Life Insurance and Annuity Contracts Within and Without Tax Qualified Retirement Plans and Life Insurance Trusts ." Accessed April 12, 2021.

IRS. " Publication 575 (2020), Pension and Annuity Income ." Accessed April 12, 2021.

Practical Law. " Security Interests: Life Insurance Policies ." Accessed April 12, 2021.

Collateral assignment of life insurance

Advertiser disclosure.

We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.

Our content is backed by Coverage.com, LLC, a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in states where it is licensed . Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.

How We Make Money

The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories, except where prohibited by law for our mortgage, home equity and other home lending products. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you.

  • Share this article on Facebook Facebook
  • Share this article on Twitter Twitter
  • Share this article on LinkedIn Linkedin
  • Share this article via email Email

A businessowners shaking hands with an life insurance rep

At Bankrate, we take the accuracy of our content seriously.

“Expert verified” means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced.

Their reviews hold us accountable for publishing high-quality and trustworthy content.

The Bankrate promise

At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity , this post may contain references to products from our partners. Here's an explanation for how we make money . This content is powered by HomeInsurance.com (NPN: 8781838). For more information, please see our Insurance Disclosure .

Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next.

Bankrate follows a strict editorial policy , so you can trust that we’re putting your interests first. All of our content is authored by highly qualified professionals and edited by subject matter experts , who ensure everything we publish is objective, accurate and trustworthy.

Our banking reporters and editors focus on the points consumers care about most — the best banks, latest rates, different types of accounts, money-saving tips and more — so you can feel confident as you’re managing your money.

Editorial integrity

Bankrate follows a strict editorial policy , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.

Key Principles

We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.

Editorial Independence

Bankrate’s editorial team writes on behalf of YOU — the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information.

How we make money

You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey.

Bankrate follows a strict editorial policy , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers.

We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money.

Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories, except where prohibited by law for our mortgage, home equity and other home lending products. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range, can also impact how and where products appear on this site. While we strive to provide a wide range of offers, Bankrate does not include information about every financial or credit product or service.

Insurance Disclosure

This content is powered by HomeInsurance.com, a licensed insurance producer (NPN: 8781838) and a corporate affiliate of Bankrate.com. HomeInsurance.com LLC services are only available in states where it is licensed and insurance coverage through HomeInsurance.com may not be available in all states. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.

Using your life insurance policy as collateral is one way of securing a loan without the risk of using your home or car. Most loans are either secured or unsecured, and while an unsecured loan does not require collateral, they are not always the most affordable or available option to many loan seekers. Bankrate breaks down the collateral assignment of life insurance process along with alternative options to help you decide what type of loan may be best for you.

Compare life insurance providers quickly and easily

See which provider is right for you.

Whole life insurance combines life insurance with an investment component.

  • Coverage for life
  • Tax-deferred savings benefit if premiums are paid
  • 3 variations of permanent insurance: whole life, universal life and variable life include investment component

Term life insurance is precisely what the name implies: an insurance policy that is good for a specific term of time.

  • Fixed premium over term
  • No savings benefits
  • Outliving policy or policy cancellation results in no money back

This advertising widget is powered by HomeInsurance.com, a licensed insurance producer (NPN: 8781838) and a corporate affiliate of Bankrate. HomeInsurance.com LLC services are only available in states where it is licensed and insurance coverage through HomeInsurance.com may not be available in all states. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.

What is collateral assignment of life insurance?

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 lender can collect the outstanding loan balance from the death benefit of your life insurance policy. Any remaining funds from the death benefit would then be disbursed to the policy’s designated beneficiary(ies).

Why use life insurance as collateral?

There are several reasons why you might want to use life insurance as collateral for a loan. Among them:

  • It can be affordable. Depending on your age, health, the type and value of policy, life insurance costs vary. However, life insurance premiums may be less than what you would pay for an unsecured loan with higher interest rates.
  • You are not jeopardizing your personal property. By using life insurance as collateral, you might be able to take out a secured loan without putting your home or vehicle at risk. If you pass away before the loan is repaid, the lender will use funds available from your life insurance policy’s death benefit to pay off the loan.
  • It may be attractive to lenders. Many financial institutions view life insurance as a good option for collateral, knowing that they will very likely have the money to pay off your loan in the event of your death.

Of course, there are also some situations in which a collateral assignment of life insurance is not the best option. Some people are unable to obtain affordable life insurance due to their age or health complications. It can also be difficult to use an existing life insurance policy as collateral for a loan; a lender may require you to take out a new policy, specifically for the purpose of the collateral assignment.

How do I take out a loan using a collateral assignment of life insurance?

If you would like to take out a loan using life insurance as collateral, your first step should be to find a lender willing to issue this type of loan. After you confirm the lender’s requirements, you may be able to use your existing life insurance policy (if the lender will allow it) or you might need to purchase a new policy for a collateral assignment.

If you take out a new policy, the application process is the same as applying for any other type of life insurance and may require extensive underwriting, including a medical exam. After you have purchased the new policy, you will need to ask the insurance company for a collateral assignment form that you will need to complete, noting your lender as an assignee. Generally, a lender will not be listed as a beneficiary. The beneficiary(ies)will be the person you would like to receive any leftover benefits not claimed by the lender.

What types of life insurance can I use as collateral for a loan?

Both main types of life insurance, term life insurance and permanent life insurance , can be used to secure a loan. If you have a policy that falls into a subcategory of permanent life insurance, such as whole life, universal life, variable life or variable-universal life, these too are eligible to be used as collateral. However, each financial institution will likely have different requirements. Make sure to discuss these requirements with your lender before purchasing life insurance with the specific intention to use it as collateral. If more than one option is available, you may want to compare the cost of premiums for each type of policy.

Alternatives to life insurance as collateral

If you are considering a collateral assignment of life insurance, there are a few alternative funding options that might be worth exploring. Since many factors determine each option, working with a financial advisor may be the best way to find the ideal solution for your situation.

Unsecured loan

Depending on your situation, an unsecured loan may be more affordable than a secured loan with life insurance as collateral. This is more likely to be the case if you have good enough credit to qualify for a low interest rate without having to offer any type of collateral. There are many different types of unsecured loans, including credit cards and personal loans.

Cash value life insurance

Some permanent life insurance policies accumulate cash value over time that you can use in different ways. If you have such a policy, you may be able to partially withdraw the cash value or take a loan against your cash value. However, there are implications to using the cash value in your life insurance policy, so be sure to discuss this solution with a life insurance agent or your financial advisor before making a decision.

Home equity line of credit (HELOC)

A home equity line of credit (HELOC), is a more flexible way to access funds than a standard secured loan. While HELOCs carry the downside of risking your home as collateral, you retain more control over the amount you borrow. Instead of receiving one lump sum, you will have access to a line of credit that you can withdraw from as needed. You will only have to pay interest on the actual amount borrowed.

Frequently asked questions

What is the best life insurance company, what type of loans are collateral assignments usually associated with, what are other common forms of collateral, related articles.

Mortgage prequalification: What it is and how to get it

Mortgage prequalification: What it is and how to get it

HELOC is not interest only forever

What is an interest-only HELOC?

A female business owner talks with her partner in their restaurant.

What is an unsecured business loan and how does it work?

A middle age Black couple hugs each other

What are annuities and how do they work?

Policygenius does not allow the submission of personal information by users located within the EU or the UK. If you believe this action is in error, or have any questions, please contact us at [email protected]

What Is A Collateral Assignment Of Life Insurance?

A couple signing up for Collateral Assignment

Our content follows strict guidelines for editorial accuracy and integrity. Learn about our editorial standards and how we make money.

A collateral assignment is sometimes a necessity if you’re applying for larger financing amounts such as a mortgage or business loan.

But what is a collateral assignment and how do you go about getting it on your life insurance policy? 

In this article, we’ll cover what collateral assignment is, how you can add it to your life insurance, and what alternatives there are out there. 

What Is Collateral Assignment? 

A collateral assignment is a process by which a person uses their life insurance policy as collateral for a secured loan.

In simple terms, collateral assignment is reassigning priorities for who gets paid the death benefit of your life insurance policy.

What Is a death benefit?

A death benefit or face value of a life insurance contract is the amount of money that your beneficiaries will receive from your policy when you die.

Once you apply for collateral assignment and it’s approved, your specified debtor (the loan provider) will be paid first and then your beneficiaries will receive what is left over in your life insurance policy.

This is different from using your cash value to loan money as you are taking out a loan from another financial institution and using your policy as a guarantee that you’ll cover any debt when you die. 

For example, let’s say you want to take out a secured loan from your local bank and want to use your life insurance policy as a collateral assignment.

In this situation, you’d still have to pay back any debt you have with interest during the loan period. 

However, the life insurance policy would be used if the borrower dies and there was an outstanding loan balance remaining. 

Secured Loans vs. Unsecured Loans

Secured loans are debts that are backed by assets that a lender can claim if the debt isn’t repaid. These types of loans often offer better interest rates and more generous payment terms.

Unsecured loans are debts that don’t have collateral. These types of loans are more expensive to repay and considered riskier than secured loans.

A woman signing up for Collateral Assignment.

Source: Pexels

How Does Applying for Collateral Assignment Work?

The process for getting collateral assignments for life insurance is the same as when you apply for new life insurance coverage. 

All you’ll be doing is indicating to your life insurance provider that your lender will be given priority for the amount of money you have borrowed through them.

There is an:

Application process.

Underwriting process.

Offer that you’ll receive.

You’ll be required to name beneficiaries as well as indicate ownership of the life insurance policy in the collateral assignment form which will be provided by your life insurance company.

This is because you’re changing the terms of your payout and your life insurance provider will need to follow these instructions once you die.

NB Some insurance companies don’t offer collateral assignment on new loans and generally only provide this feature to an existing life insurance policy.

You should check beforehand to see what will be required to apply for a collateral assignment. If you need help finding plans that offer this, send an email to a licensed insurance agent today.

Once you’ve assigned a new collateral assignee to your life insurance policy, they will be entitled to lay a claim on your death benefit for any debt you have with them.

For example, let’s say you take out a collateral assignment life insurance policy worth $200,000 for a loan of $75,000 over 7 years at an interest rate of 18%.

If you die after five years, based on these figures, you’ll still have $41,231.02 owed on your loan.

Your $200,000 life insurance plan will be used to cover this and your beneficiaries will receive the remaining $158 768.98 from your life insurance policy.

Your lender is only allowed to take the amount outstanding on the debt owed and cannot take more. 

What about Missed Payments and Cash Value Life Insurance?

If you have a permanent life policy with a cash value account, sometimes called cash value life insurance, your lender will have access to it to cover missed payments on your loan.

For example, let’s say you miss a payment on your loan and have a collateral assignment. Your lender will be able to access your cash value account and withdraw that month’s payment to cover your debt.

Who Can You Add as a Collateral Assignee?

You can add any person or institution as a collateral assignee to your life insurance policy if you owe them money.

This can include banks, lenders, private individuals, businesses, or credit card companies. 

The most common collateral assignments are for business loans and mortgages. This is because they are loans for high amounts that are paid off over several years. 

In fact, some banks and financial lenders may require that you add them as collateral assignees when you apply for any of the financing options mentioned below.

Common Collateral Assignees Include:

💵 Bank loans

💳 Credit cards

🏡 Mortgages

💼 Business loans

What Do I Do If I’ve Paid Off My Debt?

If you’ve managed to pay off your debt - firstly, congratulations! Secondly, you’ll want to notify your life insurance company that you’ll be changing your collateral assignments on your life policy.

While there is no legal claim that a company can make to debts that aren’t owed anymore, there may be a hold up in paying out the death benefit to your beneficiaries and other collateral assignees.

Life insurance companies will have to figure out who must be paid first, according to the order stated in your collateral assignment terms.

In general, life insurance policies will settle claims within 24 hours of being notified of a policyholder’s death.

The process can be delayed if you do not release your collateral assignees from your life insurance contract. 

Tips to Make Sure Your Life Policy Is Paid Out Quickly

Here are some tips if you want your beneficiary claims to be handled as fast as possible:

1) Keep a copy of your life insurance policy and policy number in a safe place or with your lawyer, financial advisor, or estate planner.

2) Speak to your beneficiaries about your policies and give them the contact details of the relevant life insurance company.

3) Make sure your life insurance contract is updated to reflect your latest list of beneficiaries.

4) Make sure you have your beneficiaries' details listed in the contract or with your lawyer.

The Benefits of Using Collateral Assignment of Life Insurance

While adding a collateral assignment to your current life insurance policy may require an application, paperwork, and time, there are benefits:

Many lenders like it: Banks and financial institutions sometimes prefer it when applicants use their life insurance policy as collateral for a loan. This is because they know that their debt will be serviced long-term by your insurance company which makes their loan to you a lower risk.

Your private property won’t be jeopardized: The last thing you want when you go into debt is to put your personal items, such as your car, investments, or home on the line as collateral. Using collateral assignment is an alternative to this and can protect you in the event that you can’t service your debt.

It can be affordable for some people: If you’re in good health and young, you may be paying affordable rates for permanent life cover. In situations like this, it can make sense to use your life cover as collateral for debts you’ve incurred.

A form to sign up for Collateral Assignment.

What Are Some Alternatives to Collateral Assignment?

Term Life Insurance: Getting a term life insurance contract to cover specific debts is one way of ensuring your estate and family are protected when you die.

There are multiple types of term life insurance plans and they are more affordable than permanent life insurance. This makes options like level term life insurance and decreasing term life insurance ideal for different types of debts you may have over your lifetime.

What Is Term Life?

Term life is a temporary life coverage option that lasts for a specific period of time. It is different from permanent life insurance which lasts until you die or you stop paying premiums.

Term life contracts are typically between 5 to 20 years, however, you can get renewable term life plans and even a forty-year term life plan .

Borrow from your life insurance: If you have a permanent life insurance policy, such as universal, whole, or indexed life cover, you can borrow money from your cash value account. 

However, keep in mind that you’ll be required to pay interest on any amount that you borrow and any amount of debt incurred will be deducted from your policy’s death benefit when you die.

What Is Cash Value?

Cash value is a feature of permanent life insurance plans that policyholders can contribute additional money toward while they have a policy in force.

This money is set aside in a cash value account which is tax-deferred and can be used in a number of ways.

In some cases, if your policy allows it, you can end your contract and get the cash surrender value of it. This amount is usually much less than the value of your total life insurance contract. 

Our Verdict on Collateral Assignment

Many banks, lenders, and financial institutions want long-term guarantees that you’ll be able to service your debt if anything happens to you.

In some situations, getting collateral assignments on your life insurance to cover these debts is a good option for people who are trying to access finance from these institutions. 

However, there is a risk that your death benefit payout may be delayed for your beneficiaries if you don’t keep your different collateral assignees up to date.

If you already have a life insurance policy, you should contact your provider to find out what the process is and what you’ll need to do to change the collateral assignees on your policy.

If you don’t have a policy yet, our advice is to look at all of your options before you decide to take a permanent life insurance contract with a collateral assignment.

There are alternatives out there that are more affordable if you’re looking to protect your family and estate from debt.

Term life is one such option that is adaptable to your life and easy to get. 

For example, a decreasing term life insurance policy might be the right choice for someone who has recently bought a home and wants to cover their mortgage while they pay it back.

Another option is final expense insurance, which is a permanent life policy for smaller amounts, usually under $50,000.

With final expense insurance, your beneficiaries can pay for anything they want, including any debts you may have had in your life.

The process for applying is simple and you won't have to go through a medical exam or intensive underwriting as you would with traditional permanent life insurance. 

If you need any assistance with finding, comparing, or learning about the different life insurance options to cover your debts, speak to one of our expert advisors today at 1-888-912-2132 or [email protected] .

Where Can I Learn More about Life Insurance?

If you’re looking to learn more about life insurance, different kinds of coverage, or costs, visit our life insurance hub to find our latest articles.

We do the research so that you don’t have to and our articles cover complicated topics like what is a cash value account, what is key person insurance, or how long life insurance takes to pay out a death benefit.  

If you need help with quotes, try out a life insurance quote finder or reach out to us via email at [email protected] to get in touch with a licensed life insurance agent for your state.

how to do collateral assignment

Collateral Assignment of Life Insurance: Everything You Need to Know

collateral assignment of life insurance complete guide - everyday lfie insurance online calculator

  • August 8, 2023

Life insurance isn’t just about peace of mind for the future; it can also serve as a lifesaver when you’re looking for ways to secure a loan. This clever maneuver is known as a collateral assignment of life insurance. It’s a deal between you and your lender where your life insurance policy, specifically the cash value component, is used as collateral for a loan.

When assigning your life insurance policy as collateral for a loan, the lender will become a temporary beneficiary of your policy. If the assigner dies before repaying the loan, the lender can claim the death benefit up to the outstanding loan balance. If the policyholder defaults, the cash value of the policy will be collected.

Who can benefit from the collateral assignment of life insurance?

If you need to secure a loan but don’t have typical assets like a house or significant savings, collateral assignment of life insurance could be your ticket. It’s great for small business owners, entrepreneurs, and folks with sizable insurance policies but limited liquid assets. 

To use a life insurance policy as collateral, the policy term should be at least as long as the loan duration and should possess a cash value component equal to the loan amount.

What types of life insurance can be used as collateral?

To make this work, you’ll need a permanent life insurance policy that has a cash value component. This includes options like whole life, universal life, and variable life insurance. Unfortunately, term life insurance doesn’t quite make the cut, as it lacks a cash value.

How to use life insurance as collateral for a loan?

1. Ensure the lender accepts life insurance as collateral.

2. Apply for the collateral assignment through the bank or directly with the insurer. 

3. Fill out an “assignment of Life Insurance Policy as Collateral form” provided by your insurer. 

4. Submit the form to the insurer, and wait for approval.

5. Once the collateral assignment is approved, notify your bank or lender. 

6. Bank or lender will set the loan terms such as the interest rate, payment terms, and other obligations.

how to do collateral assignment

Is life insurance as collateral widely accepted? Do all banks accept it?

Typically, permanent life insurance policies such as whole life and universal life, which have a cash value component, can be used as collateral. Lenders such as banks want security, and the cash value component of a whole life insurance policy provides this. This cash value grows over time and can be used if the borrower defaults on the loan, which decreases the risk for the lender.

How is the loan amount determined when using life insurance as collateral?

The borrowing capacity is determined as a proportion of the cash value, varying across different insurance companies. Typically, the permissible borrowing range hovers around 90% to 95%. Applying these percentages to a cash value of $50,000, one could potentially secure a loan amounting to $45,000 to $47,500.

What happens when you are unable to pay back the life insurance loan?

The cash value of your policy will be collected by the lender. If this is insufficient, the amount you owe is deducted from the death benefit when you pass away. In some instances, you might also incur a substantial tax bill.

Is the collateral assignment of the life insurance agreement permanent? 

No, the collateral assignment of the life insurance agreement is not permanent. It’s tied to the lifespan of the loan. Once the loan is fully repaid, the assignment can be released, and the life insurance policy returns to its original beneficiary arrangement.

What are the tax implications of using life insurance as collateral for a loan?

If the amount you borrow directly from the insurance company is equal to or less than the total insurance premiums you have paid, it is not subject to taxation. However, If you surrender your policy, or allow it to lapse, and the total amount of outstanding loans and interest surpasses what you have paid in premiums, there is a possibility of incurring a tax liability. In essence, you would be required to pay income tax on any investment earnings in that scenario.

Best Online Life Insurance Calculator

At Everyday Life Insurance , we specialize in finding the perfect policy to match your unique circumstances. Whether you’re a small business owner looking to back your loan or a stay-at-home mom working to provide for her family, we’re here to help. Use our online life insurance calculator to find the best plan for your finances, in just 15 minutes.

Disclaimer : The comments, opinions, and analyses expressed at Everyday Life are for informational purposes only and should not be considered individual investment, legal or tax advice.

  • How it works
  • Get started
  • Smart life insurance guide
  • Affiliate program
  • Privacy policy
  • Legal information

Everyday Life

12 Forbes Ln, Andover MA 01810

(888) 681-3811

[email protected]

695 Atlantic Avenue, 9th Floor, Boston MA 02111

© 2024 Everyday Life Inc. All Rights Reserved.

Here is your personal referral link..

how to do collateral assignment

Share it with your friends!

how to do collateral assignment

Risk Management

Capital markets.

how to do collateral assignment

Ariel Tavor

Keith yagnik, ariel serber, michael kikoz.

how to do collateral assignment

Life Insurance Quote Tool

See the he numbers and the numbers behind the numbers — all policy valuations, underwriting, cost and returns — so you can make an informed decision for your financial future.

how to do collateral assignment

Life Settlement Calculator

Maximize the value of your life insurance policy with our life settlement calculator. Explore the policy valuations, underwriting assessments, costs, and potential returns, including the numbers behind the numbers.

  • (212) 548-6201

Guidelines for Collateral Assignment of Life Insurance

  • By: Risk Management Team

how to do collateral assignment

Lions Financial provides comprehensive guidelines for the collateral assignment of life insurance. The collateral assignment involves using a life insurance policy as collateral for a loan or debt. Lions Financial assists individuals and businesses in understanding the process and implications of collateral assignment, ensuring they make informed decisions.

The guidelines cover important aspects such as determining the policy’s cash surrender value, establishing the assignment amount, and defining the rights and responsibilities of the assignee and assignor. Lions Financial also helps clients navigate legal and tax considerations related to collateral assignment.

Banks require insurance for collateral assignment so that they can always get any outstanding loan amount back if the loaner defaults or dies before being able to pay the loan back.

Collateral is pledged as security for repayment of a loan, to be forfeited in the event of a default. A collateral assignment of insurance is a conditional assignment appointing a lender as the primary beneficiary of a benefit to use as collateral for a loan. If the borrower is unable to pay, the lender can cash in the insurance policy and recover what is owed.

An Absolute assignment in insurance involves signing over your entire policy to another person or entity. The person who is selling or gifting the policy is known as the assignor, and the individual or individuals who receive it are the assignee. The assignee takes full ownership of the policy, being held liable for any premiums and also having the authority to change or designate new beneficiaries.

Collateral assignment of life insurance essentially works like a standard loan. The insurance policy is “collateral” for a loan, and the person or organization that pays out that loan is the temporary beneficiary of the policy’s death benefit until the loan is repaid. The entity taking over the policy does so on a conditional basis and, therefore, doesn’t have the authority to make changes to it, re-sell it or take any of its cash value. Instead, the assignee can only draw on the death benefit if the policyholder defaults.

On the other hand, Collateral Assignment enables policy holders to regain control of their own policy once a medical or other crisis has resolved. It is one of the 3 common ways to borrow from your life insurance policy and access the cash value. With a collateral assignment, you are able to eventually benefit again from the long-term advantages of a life insurance policy.

If one already has a life insurance policy with a face value greater than the loan amount, he can collaterally assign that policy by requesting the paperwork from the insurer. If one doesn’t have a life insurance policy or needs additional coverage, he will need to apply for life insurance and go through underwriting.

Whether one has a term life insurance policy or a whole life insurance policy, he will be the policy owner and responsible for the premium payments. The borrower must be the owner of the policy but not necessarily the insured, and the policy must remain current for the life of the loan with the owner continuing to pay all necessary premiums.

Any type of life insurance policy is acceptable for collateral assignment, provided the insurance company allows assignment for the policy. Some banks may require an escrow account for the life insurance premiums, others may require proof of premiums paid or prepaid.

If one has a whole life policy that he uses for collateral assignment, banks will have access to the cash value of the policy if he defaulted on the loan. If the loaner dies, the insurance company will use the death benefit to pay off any outstanding loan amount. The rest, if any, goes to the assigned beneficiaries.

Insurance companies must be notified of the collateral assignment of a policy. When one is applying for life insurance for the purpose of collateral assignment, he will name his beneficiaries as he would for a personal policy. The bank is not his beneficiary, but the assignee on the collateral assignment after the policy is in force. On the form, he will be the assignor.

There are several reasons to consider a collateral assignment of life insurance. The Collateral assignment guarantees the safety of the amount that was loaned out to the lender, especially under the listed terms and conditions that the lender will be paid in full; moreover, the remaining will be given to the listed beneficiaries in the case of death of the borrower.

  • It safeguards the interests of the lender. A collateral assignment plays a critical role in securing a loan for the borrower. It is the insurance company’s obligation to safeguard the lender’s interest after collecting the collateral assignment form.
  • A collateral assignment allows you to be more flexible with your capital assets.
  • A collateral assignment allows the borrower to purchase insurance as a low-cost collateral to secure paying back a loan.

A collateral assignment has great advantages, but it has certain limitations as well. First of all, a collateral assignment has a limited death benefit. You should assign part of the death benefits as collateral instead of the total benefits which avoids the circumstances where the lender claims all the death benefits after you die.

  • Difficulty in obtaining an affordable insurance policy with low premiums.
  • Loss of policy control is another disadvantage of collateral assignment.
  • Collateral assignment suffers from the limited use of cash value.

Any type of life insurance policy is acceptable for collateral assignment, provided the insurance company allows assignment for the policy.

Some examples of insurance policies you can use for collateral assignment are:

  • Term Insurance

Term life insurance is used to offer coverage for a specific number of years. The proceeds of the policy are only paid out after the insurer dies, and it lacks equity and a surrender value. It falls under the category of the most affordable insurance plans which is why it is a top pick for most people.

You don’t need to buy a plan that exceeds or falls below your needs. Term life insurance enables you to purchase a plan tailored to your needs and since it is not permanent, you are going to pay low premiums.

  • Universal Life Insurance or Whole Life Insurance

With universal life insurance, you will be able to design the insurance policy according to how you want it. The insurance proceeds are usually released when the insured party dies. It is great for individuals looking for a permanent insurance policy that never expires unless you are dead. In short, you will continue to receive coverage as long as the annual premiums are getting paid.

On the downside, universal life insurance policies tend to be expensive because they are meant to offer life term coverage.

On the bright side, the policies build cash value and the longer the premiums are paid,  the more value the plan will build. This cash value can be used on other investments or to pay off the outstanding premiums.

When applying for a collateral assignment of life insurance, you can use two ways to do so: through the bank or through your insurer. The two are explained further below;

  • APPLYING THROUGH YOUR BANK

There are some lenders who will consider using your existing life insurance policy for collateral assignment if you request it, but others might require you to take out a brand-new policy specifically  for that purpose.

In either case, using life insurance for collateral assignment when applying for loans is a fairly common practice that almost every life insurance company and the bank is equipped to handle.

You start off the application for assignment by securing the loan with the bank in question. This is where you will discover the limitations and regulations the bank has regarding the collateral assignment of life insurance. Each lender has different policies.

  • APPLYING THROUGH YOUR INSURER

Once you have found the right loan, you must fill out the collateral assignment form. Your insurer will be able to provide you with this form easily.

The form has to be filled out by every party involved, including yourself, the lender, and the insurance company. You can sign the forms at the time of your loan application or you can sign them after your policy has been issued.

If you are taking out a brand-new life insurance policy, you are better off signing all of the documents for this at the beginning of the application. The time frame to request a collateral assignment and be accepted for it ranges between 24 hours and 48 hours.

Some banks might require that you notarize the form, which can add some time to the application and acceptance process

  There are several essential parts to be included in the collateral assignment forms.

1.  Policy Identification

This part focuses on the information of the insured, including policy numbers, owner’s first and last names, address, phone number, and email address.

2. Assignee information:

This part contains information about the assignee. The assignee could be an individual, corporate entity or trust. If the assignee is a Trust, he/she ought to list out all the names of currently serving trustees.

parts of collateral Assignments

Moreover, this part should include the assignee’s full legal name, address, tax ID, email address, and phone number. 3. Terms and conditions: This section lists all the terms and conditions of the assignment. To be specific, this section covers in detail the rights, for instance, “the sole right to collect from the Insurer the net proceeds of the policy, the sole right to obtain one or more loans or advances on the Policy”, etc. Moreover, this section might also include IRS certification to certify the taxpayer identification number filed in the previous sections are authentic and correct.

4. Signatures: All owners and assignees are required to sign and date in this section after reviewing the previous terms and conditions. Moreover, beneficiaries are also required to sign this form. 5. Submission of the assignment form: After careful revision of terms and conditions of the assignment and signature, the assignment form should be submitted for processing. This part should list detailed instructions for sending back the assignment form. Moreover, this part should also provide the address, contact information, and the fax number of the company who issued the policy.

You apply for a life insurance policy and name your beneficiary (your spouse, children, whomever). Just as you normally would. After the policy goes into force, a collateral assignment form from the life insurance company will be sent for you to complete. When a life insurance company sets a collateral assignment of life insurance, this usually takes in the region of seven to ten days to be filed and acknowledged. However we may expedite this if the collateral assignment is required more urgently.  When taking out life insurance at the same time as assigning the collateral, the collateral assignment form must be submitted with the life insurance application. You get the collateral assignment form signed (some companies require a notarized signature). It will take a few days to a few weeks for the life insurance company to acknowledge the assignment. Once the loan has been paid in full, the assignment must be lifted from the policy by means of a release form sent by the lender to the insurance company. When it receives the release, the insurance company cancels the assignment and restores all rights in the policy to the owner. A collateral assignment allows the life insurance company to pay your SBA lender only what they are owed and the rest goes to your beneficiary. As you pay down the loan, the amount of coverage will be more than you need, and a collateral assignment form makes sure the lender is only paid what is needed. If you named the lender as the beneficiary, the lender would receive the entire death benefit even though you’ve paid down the balance. And if you did that, the life insurance company wouldn’t issue you the amount of coverage needed – they’ll typically only issue 80% of the loan amount. So, it’s imperative that you use a collateral assignment. The Collateral Assignment of Life Insurance is a way to secure funding for business or other ventures. It is important to understand the different types of assignments and how they work before choosing this option.  At Lions Financial, we offer a variety of services and resources to help businesses secure funding and protect their assets. 

To learn more about these services, sign up for our newsletters or make an appointment with a representative today!   Contact us at https://lions.financial/contact/   Learn more, visit:   What Are the Tax Considerations For Life Insurance Premiums Under Collateral Assignment For Business Bank Loans     Should You Consider An Asset-Based Loan For Your Business   Process For A Business To File a Life Insurance Claim   Life Insurance Requirements for SBA Loans    Life Insurance Requirements when getting an SBA Loan The sources we use for this information include: https://www.investopedia.com/terms/c/collateral.asp   https://www.investopedia.com/terms/l/lender.asp   https://www.investopedia.com/terms/b/beneficiary.asp  

Risk Management Team

View all posts

Life Insurance Requirements When Getting an SBA Loan

  As a business owner, you are required to purchase life insurance as part of a loan agreement. This life insurance policy will serve as

The Imperative Of Due Diligence In Mergers And Acquisitions: Navigating Success With Lions Financial

The Imperative of Due Diligence in Mergers and Acquisitions: Navigating Success with Lions Financial

In the corporate realm, mergers and acquisitions (M&A) are akin to the high-stakes world of chess. One wrong move can spell disaster. Therefore, due diligence,

Why You Should Hire a Financial Advisory for Due Diligence: Unlocking the Power of Expertise and Efficiency

In the ever-evolving landscape of business acquisitions and financial endeavors, one thing remains constant: the critical importance of due diligence. Whether you are a seasoned

Why Every Business Owner Needs a Valuation Before a Sale

In the fast-paced world of business, there’s rarely a moment to pause and reflect on the true value of your enterprise. Yet, understanding the precise

Schedule a call with us to get the assistance you need for your business!

Key items to include in a business plan, business planning in covid-19 era, ryanair: investment research analysis risk management, copyright © 2023 | lions financial.

en_US

  • Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Compare quotes instantly.

BestLifeRates.org

What Is A Collateral Assignment?

' src=

Certain links on this page will refer you to products we might recommend. This creates no additional cost to you , and helps provide us an income so we can continue to bring valuable information to your fingertips. For more information on how we're paid, click our link below. Full Disclosure

Life insurance is often the key to securing a loan.

Frequently, lenders request a  collateral assignment of life insurance  as a requirement for loan approval.

Your bank, or lending institution, has an interest in guaranteeing the loan they provide will be paid back , regardless of your circumstances.

Think of an assignment of life insurance as collateral as a promise to your lender.

It’s the lender’s job to assess your ability to repay a loan, and the promise of a life insurance policy can make all the difference.

Here, we will cover life insurance as a collateral assignment in its entirety so that you can make an educated decision moving forward.

Table of Contents

  • Definitions
  • Requirements
  • How To Decide

What Is Collateral Assignment Of Life Insurance?

A conditional assignment in which the lender is a recipient of the death benefit (or cash value) of a life insurance policy for an amount equivalent to the balance of the loan.

Let’s take a look at a couple of definitions related to collateral assignments:

  • Collateral  – something offered (in this case, life insurance) as a guarantee of loan repayment if you default on your loan.
  • In other words, your lender no longer qualifies for the death benefit or cash value of your policy once your loan is paid off.

SBA loans , structured settlement buyouts, and bank loans commonly require life insurance as collateral.

Requirements For Assignment Of Life Insurance As Collateral

There are two primary requirements to secure a loan through the assignment of a life insurance policy:

  • The life insurance company must approve  the assignment (most do).
  • The lender must accept  the life insurance policy as collateral.

Process Of Securing Collateral Assignment

The steps to securing your loan through the assignment of life insurance as your collateral are typically uncomplicated:

  • Purchase life insurance  – be sure to name primary and contingent beneficiaries .
  • A collateral assignment is accomplished via a collateral assignment form . Your life insurance carrier typically provides the form.
  • Note – a collateral assignment can only be processed after your policy’s issuance.

Key Details

  • List beneficiaries other than your lender (for example, your spouse). Your lender should NOT be your primary beneficiary.
  • As a collateral assignee, your lender will ONLY receive the amount of life insurance proceeds which covers the balance (principal plus interest ) of your loan, should you pass away prior to payoff.
  • The remaining death benefit (or cash value amount if utilizing a permanent life insurance policy) will go to your designated beneficiaries.

Important Note!

Collateral assignments are first-in-line for your life insurance proceeds. Your beneficiaries are second-in-line.

Said differently, your policy’s proceeds go to your lender first, in the event of your death.

Once your loan is satisfied, your beneficiaries receive the remaining death benefit.

Types Of Life Insurance Used As Collateral

Just about any form of life insurance can qualify for collateral assignment as long the lender accepts it as collateral.

You will want to select the best life insurance policy to fit your needs.

Consider the following types:

It’s common to be in a hurry to secure a loan.

No exam life insurance often takes weeks off of the application process, making this type of life insurance ideal for a collateral loan assignment.

What is it?  Life insurance issued without a medical examination of the insured.

No exam life insurance is available as term life insurance, universal life, and whole life insurance.

Is No Exam right for me?

There are a number of instances in which we recommend no exam life insurance:

  • You need life insurance, fast . Some carriers will issue a no exam policy within minutes .
  • You have a few health conditions . If you are in less than excellent health, you may qualify for better rates by skipping the paramedical exam.
  • You haven’t seen a doctor in a number of years . It’s possible something might pop-up on your blood work that you are unaware of, like high cholesterol or elevated blood sugar.
  • The idea of needles and nurses makes you wince . Yep, just go ahead and skip dreaded needle if you want.

Term life insurance is popular because you can purchase a large amount of coverage with cost-effective premiums.

What is it?  Life insurance issued for a specific period of time. For example, 10 or 20 years .

Term life insurance provides coverage for when you need it most. For instance, you likely need protection while you are raising a family and working.

Premium payments and death benefit are typically level (they stay the same) for the amount of time chosen.

Is Term right for me? 

Consider purchasing term if:

  • You need a life insurance policy with a larger face amount.
  • Your life insurance needs are for a particular amount of time.
  • You are on a budget.

Whole life insurance , also called permanent life insurance, lasts your whole life.

What is it?  Lifelong life insurance protection which includes a cash value component.

Whole life insurance, as long as you make your premium payments, will not expire.

Your premium payments are typically level, and can even go away in later years.

Is Whole right for me?

Whole life insurance can make sense under certain circumstances:

  • You want a cash value component to your policy.
  • The policy loan features interest you.
  • Life insurance coverage which does not expire is ideal for you.
  • You plan to give a financial gift via life insurance.

Universal life insurance (UL) is a specific type of permanent life insurance.

What is it? A form of whole life insurance with flexible premium payments and an investment piece.

Universal life insurance is known for its adaptability.

Is Universal right for me? 

Universal life insurance includes unique characteristics:

  • Market performance affects the investment component of your policy.
  • Your premium payment amounts can be flexible. They are dependent on your life insurance needs and the needs of the policy.
  • The death benefit is often adjustable.
  • Your policy is permanent and lasts your whole life.

Guaranteed Universal

Guaranteed Universal life insurance (GUL) is ideal for someone who is looking for an affordable life insurance policy which would likely last your entire life.

What is it?   GUL is a hybrid of term and permanent life insurance products.

Guaranteed Universal is popular because it’s a cost-effective way to secure life insurance coverage until you reach a certain age, often over age 100.

Is Guaranteed Universal right for me?

Also called No Lapse , Guaranteed Universal life insurance has many appealing features:

  • Policy length is determined by an age limit, not term length. For example, your GUL policy can last up to age 121.
  • Your policy will likely be more expensive than term life insurance but cost less than whole life insurance.
  • There is often not a cash value component.
  • Your premium payments and death benefit are level.

You have the option to utilize the cash value of a permanent life insurance product (Whole Life, Universal Life, sometimes Guaranteed Universal Life) for collateral assignment. That way, your beneficiaries receive all of the death benefit.

Keep in mind , your access to the cash value of your policy will commonly restricted if you have a collateral assignment attached to it.

You will want to go about securing your collateral assignment in the best possible way and avoid potential pitfalls.

Pay close attention to our list of important do’s and don’ts:

  • Purchase life insurance that is approved for collateral assignment
  • Name primary and contingent beneficiaries
  • Verify with your lender that the policy will qualify
  • After loan payoff, obtain a release of assignment from lender
  • Submit release of assignment to life insurance carrier

Don’t

  • Assign lender as primary beneficiary
  • Purchase a policy with a face amount that is less than your loan amount
  • Let your policy lapse
  • Lose the original policy
  • Lose track of repayment schedule

Commonly Asked Questions About Collateral Assignments

It depends. The amount of time it takes to secure your collateral assignment is dependent on the carrier, the type of life insurance policy, and your unique needs. For instance, if you purchase a no medical exam life insurance policy, the process will be much faster than if you participate in a paramedical exam (fully underwritten policy). Potentially, your collateral assignment could be in place within days, or it might take weeks.

Keep in mind, you DO NOT want to list your bank or lending institution as your primary beneficiary. Instead, name those you care about most, and depend on you financially, as your beneficiaries. That way, your lender – as a collateral assignee – only receives a death benefit amount that equals the balance of your loan. The remaining policy proceeds will go to your beneficiaries.

Not necessarily. In general, a life insurance purchase does not require you to have a stellar credit rating. In fact, qualifying for a loan usually has stricter credit score requirements . If, however, you are going through bankruptcy proceedings , or you have recently, your life insurance application will likely be affected. Speak to an independent life insurance agent for information about bankruptcy and life insurance.

In a word, don’t. Plan on your lender being notified if you miss a premium payment. If you encounter financial hardship and find difficulty in making your premium payments, contact your lender right away to discuss options. Should you default on your life insurance policy, your lender could consider your loan to be in violation of the contractual provisions. Your lender may make premium payments on your behalf to keep the policy in force. Your loan will (almost always) have the payments made for you tacked on to the loan balance. If you are utilizing the cash-value of a whole life insurance policy as collateral, your lender will likely have the ability to pull funds from the cash-value to make your premium payments.

Yes. If you would like to use a different life insurance policy as a collateral assignment, speak to a life insurance agent about the process. As long as the other life insurance policy qualifies, you can change your collateral assignment. Remember, there are two primary requirements for the assignment of life insurance as collateral: 1. Your carrier must agree to the collateral assignment of the life insurance policy. 2. The lender must approve the collateral assignment – meaning the policy needs to be for an appropriate amount and length of time .

No. You do not need to be the insured on the life insurance policy. You do, on the other hand, need to be the policy owner . The policy owner has control of the life insurance contract and has the ability to designate a collateral assignment. Often the insured and policy owner are the same person.

This type of collateral assignment is unique to employers and their key employees. Split dollar plans are not designed for individuals looking to secure a loan. Essentially, a collateral assignment under a split dollar structure allows an employer to loan money to a key employee to make premium payments on a life insurance policy. In turn, the employee assigns the life insurance policy as collateral for the loan. The intended result is to provide additional value to employees who are vital to a company’s success.

Yes. As long as your policy meets the requirements, multiple lenders can accept your policy as a collateral assignment. For example, let’s say you are in the process of securing loans through your bank and an additional lending institution. Your bank loan is for $50,000 and your lending institution loan is for $80,000. The term lengths on your loans are 10 years and 15 years, respectively. In this hypothetical, say you own a 20-year term life insurance policy for $250,000. Your policy is for an amount and term length that would satisfy the collateral needs of both loans. As long as the life insurance company and lenders agree, your policy can be used as a collateral assignment for the two loans.

Possibly. You will typically need written consent from your lender prior to taking out a loan. Remember, policy loans are available through whole life insurance. In essence, your lender must agree that the collateral assignment is not put in jeopardy as a result of a policy loan. You will want to contact your lender to discuss your options.

Contact your lender as soon as your loan is paid off. The lender will provide a formal release of collateral assignment form. The form surrenders their rights to your life insurance policy. You will submit the form to your life insurance carrier . That way, your beneficiaries will not encounter delays to your policy’s proceeds.

Is Collateral Assignment Right For Me?

The collateral assignment of life insurance DOES make sense if:

  • You are in the process of securing a loan with a collateral assignment stipulation.
  • You do not have cash reserves to use as collateral for loan approval.

The collateral assignment of life insurance does NOT make sense if:

  • Your loan can be approved without a collateral requirement.
  • Another acceptable (and preferred) form of collateral, like cash, is available.

Final Thoughts

There a number of important things you need to know if you are in the process of establishing a loan with a collateral assignment requirement:

  • Your life insurance carrier must approve  the assignment, while your lender must accept the assignment.
  • Most types of life insurance policies qualify as collateral.
  • Your lender should be your collateral assignee , NOT your primary beneficiary.
  • A collateral assignment can take just a  few days , however, it may require weeks, so plan accordingly.

Finally, the process of establishing a collateral assignment of life insurance is typically simple and straightforward, but feel free to ask someone for help.

Life insurance is an invaluable tool for securing an important loan.

' src=

Heidi Mertlich

Heidi Mertlich is the owner of NoPhysicalTermLife.com. She is an independent life insurance agent specializing in no medical exam life insurance. Heidi is also an author for LifeInsurancePost.com, an online community of life insurance experts.

Related Content

how to do collateral assignment

Best Whole Life Insurance Companies

What is voluntary life insurance, what is temporary life insurance.

BestLifeRates.org, LLC. provides independent information for the purpose of providing consumers insight into obtaining the best life insurance coverage from the best life insurance company they could obtain, subject to underwriting. No mention of an insurance company or its prices is an offer for life insurance, and all users and applicants shall be subject to any and all underwriting requirements by the insurance company in which you apply. We attempt, within reason, to ensure all quotes are up to date, though rates change periodically and are never guaranteed.

Don’t know where to start?

One of our agents in your state can help.

Please give us a few details so we can get the right agent for you. We’ll get back to you as soon as possible.

Collateral Assignment for Life Insurance: A Comprehensive Guide

how to do collateral assignment

When you apply for a loan, the lender wants to make sure you have the financial resources to repay your debt. In some cases, the underwriter may ask you to provide a form of collateral. This is typically something of value that you pledge to forfeit to the lender if you default on the loan.

Depending on your circumstances, you may be able to use your life insurance policy as a form of collateral. This could help improve your approval chances for a loan or a mortgage, but there are some important things to understand before utilizing it. Learn how collateral assignment in life insurance works, explore the upsides and downsides of choosing this option, and some alternatives you may want to consider.

Table of Contents

What does it mean to have collateral assignment of life insurance.

Collateral assignment of life insurance allows the lender to be the primary recipient of your life insurance policy’s death benefit if you have an outstanding loan balance when you die. Some assignments also allow the lender to tap into the policy’s cash value if you default on your loan. While using life insurance as collateral does not prevent you from naming your own primary and contingent beneficiaries , it does mean that the lender is paid in full before anyone else. Once the loan balance is covered, your named beneficiaries receive whatever is left.

In some cases, collateral assignment allows the lender to take over your entire policy if you stop making payments on your loan. If you stop paying your policy premiums, the lender may also take over premium payments and add the cost to your principal balance. Collateral assignment can vary depending on the lender and the insurance carrier , so it’s important to carefully read all documents before signing any agreements.

When Is Collateral Assignment Used?

Although life insurance collateral can be used for many types of lending agreements, collateral assignments are commonly used for mortgages and business loans rather than for student loans or credit card debt. They are also not used for unsecured loans, as these types of loans do not require collateral. 

It’s fairly common for a lender to request collateral assignment of whole life insurance and other types of permanent life insurance policies since they have a cash value that’s accessible at any time. This may allow the lender to access the cash value upon your default instead of only having protection when you die.

How Life Insurance Collateral Works

When you take out a loan with an assignment of life insurance, the application process is similar to the process for other types of loans. The main difference lies in the assignment of the insurance policy, which you can do by contacting the insurance carrier and requesting the required paperwork. 

If you and your spouse co-own a life insurance policy, you must both agree to the assignment and be listed as co-assignors. If your spouse does not agree, you cannot use that policy as collateral. It’s also important to note that lenders generally limit the amount of your policy value that you can use for collateral. For example, you may only be able to use 50% to 90% of the policy’s cash value when you collateralize your loan. Each lender and insurance carrier may have different rules, so it’s important to confirm this before completing your application.  

In some cases, you may also need to get permission from the life insurance company to use the policy as collateral. Once the request is approved and the paperwork completed, the lender can move forward with the underwriting process and either approve or deny your loan request.

When you’ve paid off your debt, you can contact your insurance carrier and let them know you need to release the collateral assignee for your life insurance. As long as your loan has been paid, the lender cannot make a claim against your policy, even if you forget to take this step. However, collateral assignments must be settled before funds are distributed to your beneficiaries, so completing this process can help your beneficiaries avoid unnecessary delays.

Term vs. Permanent Life Policies

Lenders generally prefer permanent policies for collateral assignment, but some may accept a term life policy as long as the insurance coverage term lasts at least as long as your loan term. Each lender is different, so you need to confirm the requirements when applying for your loan.

The lender may also prefer a permanent policy because it can provide access to its cash value. Since term policies have no cash value, there’s no recourse for the lender until you die and they’re able to access the policy’s death benefit.

Current vs. New Policies

Some lenders allow you to collaterally assign a life insurance policy you already have in place, while others may require you to take out a new policy. Your ability to use an existing policy also depends on whether the insurance company allows collateral assignment. 

Some insurance companies also do not allow you to complete a collateral assignment during the application process. In this case, you need to finish the process of setting up your policy, then file paperwork to complete the life insurance assignment. Keep this in mind when determining your timeline to complete the required steps. 

Assignees vs. Beneficiaries

When assigning a lender to our policy, you do not name the lender as your beneficiary . Instead, you name the lender as an assignee and designate your beneficiaries in the same way you would with a non-assigned life insurance policy.

If you die before you finish repaying your loan, the lender receives the outstanding loan balance. Your beneficiaries then receive the remainder of the death benefit. If you’ve named multiple beneficiaries, they each receive their designated percentage of the remaining balance.

Should You Consider Using Your Life Insurance as Collateral?

While using your life insurance as collateral may be an option for you, it’s important to carefully consider the pros and cons of doing so. This can help you determine whether it’s a good option for you or if you may want to consider an alternative.

Pros  

If your bank requests a life insurance collateral assignment, you may consider agreeing based on the following advantages: 

  • Improved loan approval odds:  Assigning your life insurance policy as collateral may help you get approved for a loan so you can reach your financial goals, such as starting a business or buying a home.
  • Asset protection:  When you use a life insurance policy as collateral, you’re not risking other assets, such as your home or retirement account.
  • Affordable rates:  Due to the certainty collateral assignment adds to a loan application, lenders may be willing to offer lower interest rates on collateralized loans.
  • Tax benefits:  When you use a life insurance policy as collateral, there are no tax implications. This may not be the case if you take out a policy loan or a withdrawal. 

Cons  

While collateral assignment may initially seem like a great idea, there are some potential drawbacks to consider before making your decision:

  • Estate planning issues:  If you die before your loan is paid off, the collection of collateral could throw off your estate plan and leave your beneficiaries without the financial security you originally planned to provide.
  • Loss of control:  When you use an insurance policy as collateral, you’re required to keep it in place until the loan is paid off. Otherwise, the lender could take out another policy on your behalf and add the premiums to the principal of your loan. 
  • Limited access to cash value:  Some forms of collateral assignment may limit your ability to access your policy’s cash value, which reduces your financial flexibility.
  • May require a new policy:  Some lenders do not allow borrowers to use existing policies as collateral, and taking out a new policy requires time, effort, and additional expense. 

Alternatives to Collateral Assignment

If you’re not sure that collateral assignment is the right option for you, then you might consider exploring some alternatives. Here are a few options that may help you get the cash you need. 

Utilize a Life Insurance Cash Value Loan  

Rather than assigning your policy to the lender, you could directly tap into your cash value by taking out a life insurance loan. However, to take advantage of this option, you need to have your policy in place long enough to build up sufficient cash value, which can take several years. When you die, your unpaid loan balance and interest charges are also deducted from the death benefit.

Cash Surrender

You may consider giving up your permanent life insurance policy and taking the cash surrender value . Before choosing this option, keep in mind that it requires canceling your policy, potentially leaving you without coverage or in need of a replacement policy. You may also be subject to penalties if your policy is still in the surrender period when you initiate the cancelation.

Take Out a Home Equity Loan

If you’re not comfortable using your life insurance policy as collateral, you may consider taking out a home equity loan instead. This type of loan uses your home as collateral rather than your life insurance policy. This may also be an option if you do not already have a life insurance policy in place or your lender requires you to take out a new policy and you have health issues that prevent you from being approved for life insurance coverage.

Take Out an Unsecured Loan

Unsecured loans are not backed by collateral. This could be an option if you do not want to take the chance of losing your current assets. However, keep in mind that unsecured loans may be harder to get and typically have higher interest rates than collateralized loans.

Take Out a Term Life Insurance Policy  

In some cases, the lender may not require collateral assignment, but borrowers want to ensure their debts are paid upon their death. You can accomplish this by purchasing a term life insurance policy with a term that is equal to your loan term. This allows you to sidestep the collateral assignment process while still providing your heirs with the funds needed to pay off your remaining debt. The beneficiaries can also use any remaining death benefit as they see fit.

As you weigh your options, consider how each alternative fits with your current needs, risk tolerance, and comfort level.

Plan for your family’s future. Get a life insurance quote today.

Shop for Car Insurance

Other Insurance Products

Types of mortgages

Calculators

Find & Compare Credit Cards

Cards with Rewards

Cards for a Purpose

Cards for Building Credit

Credit Card Reviews

Understanding Credit & Score

Student Loans

Paying for College

Personal Finance for College Students

Life Events

On This Page:

  • How It Works
  • Overview of Application Process
  • Pros and Cons
  • Impact on Beneficiaries
  • Alternatives
  • Related Content

What Is Collateral Assignment of Life Insurance?

Advertising & Editorial Disclosure

Nathan Paulus

Quality Verified

About Nathan Paulus

Nathan Paulus headshot

Nathan Paulus is the director of content marketing at MoneyGeek. Nathan has been creating content for nearly 10 years and is particularly engaged in personal finance, investing, and property management. He holds a B.A. in English from the University of St. Thomas Houston.

Livewell

Financial Tips, Guides & Know-Hows

Home > Finance > How Is Collateral Assignment Used In A Life Insurance Contract?

How Is Collateral Assignment Used In A Life Insurance Contract?

How Is Collateral Assignment Used In A Life Insurance Contract?

Modified: February 21, 2024

Discover how collateral assignment is utilized in life insurance contracts to provide financial security and peace of mind. Explore the benefits and implications of this finance strategy today!

(Many of the links in this article redirect to a specific reviewed product. Your purchase of these products through affiliate links helps to generate commission for LiveWell, at no extra cost. Learn more )

Table of Contents

What is collateral assignment, benefits of collateral assignment in a life insurance contract, how does collateral assignment work, steps involved in collateral assignment, risks and considerations of collateral assignment, examples of collateral assignment in life insurance contracts, comparison with other methods of securing loans, legal and financial implications of collateral assignment.

Collateral assignment is a legal and financial concept that involves using a life insurance policy as collateral for a loan. In simple terms, it is an arrangement where the policyholder pledges their life insurance policy to a lender as security for borrowing money. Essentially, the policyholder assigns their rights to the policy’s death benefit to the lender in case the loan is not repaid.

When a life insurance policy is collateral-assigned, it means that the policyholder retains the ownership of the policy, but the lender has the right to receive the policy’s death benefit up to the outstanding loan amount. In the event of the policyholder’s death, the insurance company pays the death benefit directly to the lender to cover the remaining loan balance, and any remaining funds are then distributed to the policy’s beneficiaries.

Collateral assignment is commonly used by individuals and businesses as a means to secure loans or lines of credit when traditional forms of collateral, such as real estate or other assets, are not available or desirable. It provides lenders with additional security and reduces their risk, as they have a guaranteed source of repayment in case of default.

It is important to note that while collateral assignment can be used for various types of life insurance policies, it is most commonly associated with permanent life insurance policies, such as whole life or universal life, rather than term life insurance. This is because permanent policies have a cash value component that can be used as collateral, whereas term policies do not have cash value and are typically designed to provide a death benefit only for a specific term.

Collateral assignment offers several benefits for both policyholders and lenders involved in a life insurance contract:

  • Access to Funds: Collateral assignment allows policyholders to leverage the value of their life insurance policy to obtain much-needed funds. This can be especially useful for individuals or businesses facing financial challenges or requiring capital for investment or business growth.
  • Favorable Loan Terms: By assigning a life insurance policy as collateral, borrowers may enjoy more favorable loan terms, such as lower interest rates or longer repayment periods, compared to unsecured loans. Lenders are often more willing to offer competitive rates due to the reduced risk associated with having a guaranteed repayment source.
  • Retained Ownership: With collateral assignment, the policyholder retains ownership of the life insurance policy and continues to enjoy its benefits, including the potential for cash value accumulation and the ability to designate beneficiaries. This allows individuals to protect their loved ones financially while also meeting their immediate borrowing needs.
  • Flexibility: Collateral assignment provides flexibility in borrowing against the policy. Unlike traditional loans that may require reapplication and approval for future withdrawals or advances, policyholders can access additional funds from their life insurance policy without going through a lengthy and cumbersome approval process.
  • Tax Advantages: Collateral assignment generally does not trigger a taxable event for the policyholder, as long as the loan is repaid. This can provide tax benefits and preserve the tax-advantaged status of the life insurance policy’s cash value growth and death benefit proceeds.

It is important to consult with financial advisors or insurance professionals to fully understand the benefits and limitations of collateral assignment and how it aligns with individual financial goals and circumstances. While it offers advantages, policyholders must also consider the potential risks and implications of assigning their life insurance policy as collateral.

Collateral assignment involves a series of steps to ensure a smooth and legally binding agreement between the policyholder, the lender, and the insurance company. Here’s an overview of how collateral assignment works:

  • Loan Application: The borrower applies for a loan and agrees to use their life insurance policy as collateral. The lender assesses the borrower’s creditworthiness and determines the loan amount and terms.
  • Collateral Assignment Agreement: Once the loan is approved, the borrower and the lender enter into a collateral assignment agreement. This agreement outlines the terms of the collateral assignment, including the loan amount, interest rate, repayment schedule, and the rights and obligations of each party.
  • Notification to the Insurance Company: The borrower notifies the insurance company that they are assigning their policy as collateral for a loan. They provide the necessary documentation, including the collateral assignment agreement and any additional forms required by the insurance company.
  • Policy Endorsement: The insurance company reviews the collateral assignment documents and determines whether to endorse the assignment. Once endorsed, it becomes part of the policy’s terms and conditions.
  • Loan Disbursement: The lender disburses the loan funds to the borrower, according to the agreed-upon terms. The borrower can use the funds for their intended purpose, such as paying off debts, investing, or covering business expenses.
  • Repayment and Policy Premiums: The borrower is responsible for repaying the loan according to the agreed-upon schedule. This includes making regular loan payments, as well as continuing to pay the premiums on the life insurance policy to keep it in force.
  • Loan Repayment and Death Benefit: In the event of the policyholder’s death before the loan is fully repaid, the insurance company pays the death benefit to the lender up to the outstanding loan amount. If there is any remaining death benefit, it is distributed to the designated beneficiaries of the policy.

It is crucial for both the borrower and lender to understand and adhere to the terms of the collateral assignment agreement, as any violation or default of the agreement can have significant consequences. Consulting with legal and financial professionals can help ensure a thorough understanding of the process and the rights and obligations of all parties involved.

Collateral assignment involves several key steps to establish a legally binding agreement between the policyholder, lender, and insurance company. Here are the steps typically involved in the collateral assignment process:

  • Loan Application: The borrower applies for a loan and indicates their intention to use their life insurance policy as collateral.
  • Loan Agreement: The borrower and lender negotiate and finalize the terms of the loan, including the loan amount, interest rate, repayment period, and any other relevant conditions.
  • Collateral assignment documents: The lender provides collateral assignment documents, including the assignment agreement, to the borrower.
  • Review and Approval: The borrower reviews the collateral assignment agreement and seeks legal advice if necessary. If satisfied, the borrower signs the agreement.
  • Notification to the Insurance Company: The borrower notifies the insurance company of their intention to assign their policy as collateral. This typically involves submitting the collateral assignment agreement, along with any required forms and documentation, to the insurer.
  • Insurance Company Review: The insurance company reviews the collateral assignment documents to ensure they comply with their policies and guidelines.
  • Endorsement: If the insurance company approves the collateral assignment, they endorse the policy to indicate the assignment status. This endorsement becomes part of the policy’s terms and conditions.
  • Loan Disbursement: Once the collateral assignment is in effect, the lender disburses the loan funds to the borrower as agreed upon in the loan agreement.
  • Loan Repayment: The borrower is responsible for making the scheduled loan payments, including both the principal and interest, according to the terms of the loan agreement.
  • Policy Premium Payments: The policyholder must continue paying the premiums on the life insurance policy to keep it in force. Failure to do so may result in the policy lapsing, which could have implications for the collateral assignment.
  • Death Benefit Payout: In the event of the policyholder’s death before the loan is fully repaid, the insurance company pays the death benefit directly to the lender to cover the outstanding loan amount. Any remaining death benefit is then distributed to the designated beneficiaries of the policy.

It is crucial for both the borrower and lender to understand and adhere to the terms and conditions set forth in the collateral assignment agreement. Consulting with legal and financial professionals can help ensure a smooth collateral assignment process and minimize any potential risks or complications.

While collateral assignment offers benefits, it is important to consider the potential risks and implications associated with this arrangement:

  • Reduced Death Benefit: Collateral assignment reduces the policy’s death benefit by the outstanding loan amount. This means that the intended beneficiaries may receive less than expected in the event of the policyholder’s death, potentially impacting their financial security.
  • Loss of Flexibility: Once a life insurance policy is collateral-assigned, there may be limitations on the policyholder’s ability to make changes or access the policy’s cash value. Any modifications to the policy, such as increasing coverage or taking withdrawals, may require the lender’s consent.
  • Default and Policy Lapse: Failing to repay the loan or meet the policy’s premium payments can result in default. Defaulting on the loan could lead to the lender exercising their rights to the policy’s cash value or death benefit, potentially causing the policy to lapse and leaving the policyholder without coverage.
  • Unfavorable Loan Terms: While collateral assignment can provide access to funds and favorable loan terms, borrowers must ensure they thoroughly understand the terms and conditions. High interest rates or unfavorable repayment terms could potentially lead to financial strain or difficulties in meeting loan obligations.
  • Possible Negative Impact on Credit: Should the borrower default on the loan, it can have a negative impact on their credit history and credit score. This can make it more challenging to secure future loans or obtain favorable interest rates on credit products.
  • Risk of Loan Acceleration: In certain cases, the lender may have the right to accelerate the loan repayment if specific events occur, such as a significant change in the policy’s cash value or the policyholder’s financial circumstances. This could create unexpected financial burdens on the borrower.

Before entering into a collateral assignment agreement, borrowers should carefully assess their ability to repay the loan and consider alternative options. It is advisable to consult with financial advisors or insurance professionals to fully understand the risks involved, evaluate the impact on the policy’s benefits, and determine if collateral assignment aligns with their financial goals and circumstances.

Collateral assignment can be utilized in various scenarios where individuals or businesses require access to funds and have a life insurance policy with sufficient value. Here are a few examples of how collateral assignment can be used:

  • Business Loans: A small business owner may have a whole life insurance policy with a substantial cash value. They can collateral assign the policy to secure a business loan to finance expansion or cover operational expenses. The lender would have the assurance that in the event of default, they can recoup their loan amount from the policy’s death benefit.
  • Personal Debt Consolidation: An individual with multiple high-interest debts, such as credit card balances or personal loans, may choose to collateral assign their life insurance policy and obtain a loan at a lower interest rate to consolidate their debt. This can help simplify their finances and potentially reduce their overall interest payments.
  • Estate Planning: High-net-worth individuals may use collateral assignment as part of their estate planning strategy. By assigning their life insurance policy to a trust, they can access funds during their lifetime for various purposes while ensuring a guaranteed source of repayment for any loans taken against the policy.
  • Medical Expenses: In some cases, individuals may have significant medical expenses not covered by insurance. Collateral assignment can be used to secure a loan to cover these expenses, with the policy serving as collateral, offering more favorable loan terms than unsecured medical loans.
  • Education Funding: Parents or students may choose to collateral assign a life insurance policy to secure a loan for education expenses. This can be a viable option when other forms of financial aid are insufficient or unavailable, allowing the borrower to access funds and invest in their education.

These examples illustrate different situations where collateral assignment can provide individuals and businesses with financial flexibility and access to funds using the cash value of their life insurance policies. It is important to note that each scenario should be carefully evaluated, taking into consideration the specific terms and conditions of the policy, loan agreement, and individual financial circumstances.

When it comes to securing loans, collateral assignment offers unique advantages and considerations compared to other methods of loan security. Here is a comparison:

  • Collateral Assignment vs. Traditional Collateral: Collateral assignment provides an alternative to traditional forms of collateral, such as real estate or vehicles. It allows individuals who may not have tangible assets to secure loans using the value of their life insurance policies. This can be advantageous for those who have substantial life insurance coverage but limited assets.
  • Collateral Assignment vs. Personal Guarantees: In some cases, lenders may require personal guarantees when securing loans. Personal guarantees involve the borrower or a third party assuming responsibility for loan repayment if the borrower defaults. Collateral assignment offers a more concrete and direct form of security, as the lender can rely on the life insurance policy’s death benefit as repayment.
  • Collateral Assignment vs. Unsecured Loans: Unsecured loans, such as credit cards or personal lines of credit, do not require any form of collateral. While unsecured loans generally have higher interest rates, collateral assignment can provide borrowers with more favorable terms due to the reduced risk to lenders. Collateral assignment also allows individuals to borrow larger amounts than they might be eligible for with unsecured loans.
  • Collateral Assignment vs. Cash Value Loans: Permanent life insurance policies, such as whole life or universal life, often accumulate cash value over time. Some policyholders may choose to take out loans directly from the policy’s cash value instead of collateral assignment. While cash value loans offer flexibility and do not affect the death benefit, they may incur interest charges and reduce the policy’s cash value growth potential.
  • Collateral Assignment vs. Co-Signers: Co-signers are individuals who agree to take responsibility for loan repayment if the borrower defaults. While co-signers can increase the chances of loan approval for individuals with limited credit history or income, collateral assignment eliminates the need for co-signers by using the life insurance policy as direct security.

It is essential for borrowers to carefully evaluate their options and consider the specific terms, interest rates, and risks associated with each method of loan security. Collateral assignment provides a viable alternative for individuals with substantial life insurance coverage and serves as a valuable strategy for accessing funds while leveraging the value of their policies.

Collateral assignment in a life insurance contract carries both legal and financial implications that need to be understood by policyholders considering this arrangement:

  • Legal Obligations: Collateral assignment involves a legally binding agreement between the policyholder, lender, and insurance company. The terms and conditions must be reviewed and understood by all parties involved to ensure compliance and avoid any potential legal disputes.
  • Policy Modification Restrictions: Once a life insurance policy is collateral-assigned, certain modifications, such as reducing coverage or surrendering the policy, may require the lender’s approval. These restrictions can limit the policyholder’s flexibility in managing their insurance needs and may impact their ability to make changes as circumstances change.
  • Potential Policy Lapse: Failure to continue paying policy premiums can result in the policy lapsing, which can have significant implications. If the policy lapses, the collateral assignment may become void, and the lender may lose their right to the policy’s death benefit as repayment.
  • Impacts on Beneficiaries: Collateral assignment reduces the policy’s death benefit by the outstanding loan amount. This means that beneficiaries may receive less than expected. It is essential for policyholders to communicate the collateral assignment to their beneficiaries to avoid confusion or potential disputes in the future.
  • Potential Tax Consequences: While collateral assignment generally does not trigger a taxable event, policyholders should consult with tax professionals to understand the potential tax implications based on their individual circumstances. Changes in policy ownership or assignment may have tax consequences that need to be considered.
  • Loan Repayment Obligations: Collateral assignment involves the responsibility to make regular loan payments according to the agreed-upon terms. Failure to meet these obligations can result in default and may lead to the acceleration of the loan or loss of the policy.
  • Credit History: The collateral assignment and associated loan will be reflected in the borrower’s credit history. Defaulting on the loan or missing payments can negatively impact their credit score and make it more challenging to secure future credit or loans.

Given the potential legal and financial implications, it is crucial for policyholders to thoroughly understand the terms of the collateral assignment agreement, seek expert advice when necessary, and carefully assess their ability to meet loan obligations and policy premium payments.

Consulting with legal and financial professionals can help policyholders navigate the legal and financial complexities and ensure the collateral assignment aligns with their individual goals and circumstances.

Collateral assignment in a life insurance contract can be a valuable tool for individuals and businesses seeking access to funds. By utilizing the value of their life insurance policy as collateral, borrowers can secure loans and enjoy various benefits, including favorable loan terms and retained policy ownership.

However, it is crucial to carefully consider the risks and implications associated with collateral assignment. Policyholders should assess their ability to repay the loan and understand the potential impact on the policy’s death benefit and flexibility.

Before entering into a collateral assignment agreement, it is recommended to work with financial advisors or insurance professionals who can provide guidance and ensure all legal and financial aspects are thoroughly understood. They can help navigate the complex terms and conditions, evaluate other loan security options, and align the collateral assignment with individual financial goals.

Overall, collateral assignment can be a powerful tool that provides financial flexibility and potentially better loan terms. By understanding the process and implications, borrowers can make informed decisions that suit their specific circumstances and help them achieve their financial objectives.

img

How Is A Collateral Assignment Used In A Life Insurance Contract?

img

20 Quick Tips To Saving Your Way To A Million Dollars

img

Our Review on The Credit One Credit Card

img

What Is Range-Bound Trading? Definition And How Strategy Works

img

Where To Redeem U.S. Savings Bonds

Latest articles.

img

How To Calculate Minimum Payment For HELOC At Bank Of America

Written By:

img

What Is The League Minimum Payment In The NFL

img

How To Compute The Minimum Payment For Balance Transfer At 0% APR

img

What Is The Minimum Payment On A Perkins Loan

img

What Is The Minimum Payment For Merrick Bank Credit Card

Related post.

What Is Considered The Collateral On A Life Insurance Policy Loan?

By:  •  Finance

What Does The Insuring Agreement In A Life Insurance Contract Establish?

Please accept our Privacy Policy.

We uses cookies to improve your experience and to show you personalized ads. Please review our privacy policy by clicking here .

  • https://livewell.com/finance/how-is-collateral-assignment-used-in-a-life-insurance-contract/
  • HousingWire
  • Altos Research
  • Reverse Mortgage Daily
  • Newsletters
  • HousingWire Annual
  • Gathering of Eagles
  • Virtual Events

Popular Links

  • Mortgage Rates Center
  • Whitepapers
  • Marketing Solutions
  • We’re Hiring

vpjoebiden_hud2015

What should lenders consider in 2024 for collateral risk?

There is a renewed focus on collateral risk. How does that impact appraisal technology?

  • Click to share on Twitter (Opens in new window)
  • Click to share on Facebook (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)
  • Click to email a link to a friend (Opens in new window)
  • Click to share on SMS (Opens in new window)
  • Click to copy link (Opens in new window)

Gareth- headshots -0421223397-full

The GSEs are taking a closer look at how they evaluate collateral risk. Appraisal modernization is vital. Gareth Borcherds , managing director Ascent Software Group outlines the three categories to be aware of, how appraisal modernization can help scale new initiatives and more in this executive conversation.

HousingWire: What should lenders consider in 2024 for collateral risk?

Gareth Borcherds: Collateral risk is an area where we’ve seen a lot of renewed focus and attention. The GSEs are focusing much attention on how they go about evaluating collateral risk. If we are paying attention to how they talk about it, I think we can categorize their thoughts into three categories.

Reduction in reliance on full appraisals. Many reasons given for appraisal modernization stem from appraisal turnaround times. But it’s more than just dealing with the appraiser shortage and the longevity of the industry. Collateral risk is a component of the loan that takes into consideration the credit risk of the borrower in addition to the collateral. I think that we are going to see more lenders continue to introduce more appropriate collateral evaluations relative to the credit risk. Appraisals are a high cost for borrowers and are not always needed. 

Higher quality appraisals. On the flip side, when a credit risk decision needs to have a very accurate collateral risk decision , we are going to need better quality appraisals. The benefit of reducing the number of full appraisals required is that, when we do get an appraisal, we can push for a higher quality and more accurate report. Appraisal quality is a problem the GSEs are deeply concerned about and are putting a lot of focus on trying to address. Lenders should be careful with trying to enforce appraisal quality after they get a report back. Appraisal quality starts the moment an appraisal is requested and the biggest factor that will determine success is who the appraisal goes to.

Collecting better data on collateral. To enable the two points above, the GSEs know they need more data. The two initiatives around appraisal modernization really serve one purpose and that’s getting more data over time to the GSEs about properties. The property data collection and Universal Appraisal Dataset 2.0 update serve this one goal of providing better property data. Property data in its current state is a big barrier to a lot of technology companies. They are in a unique position to make sure they get the data they need.

HW: How have recent appraisal modernization changes such as ACE + PDR affected collateral risk management?

GB: Appraisal modernization is about two things.

  • Getting better property data to improve automated collateral risk decisions in the future
  • Better aligning collateral risk decisions to credit risk decisions so there are more options available.

There is still an abundance of work to do to help the industry understand what appraisal modernization means and how it affects them. I think the most important aspect to understand is that the reduction in full appraisals is a good thing for most lenders. When you are order a PDR/PDC report, you’ve essentially gotten an appraisal waiver. Anything that comes from the property data collected will not be any different than any of the problems that would come from an appraisal, but you don’t have to worry about the value.

The problem we currently face is this: How do we scale these new initiatives so they can be fulfilled with the same level of efficiency as appraisal and other things? We need more technology and vendors to be in the space and capable of fulfilling these products. An effort Jaro is heavily invested in making a reality for our customers.

HW: How can AMCs and appraisal desks improve their vendor selection and management?

GB: Part of our JaroDesk platform is built specifically to help do this. Finding the right vendor for an assignment is the No. 1 factor in the success of any collateral risk order. With the updates, I believe the clarifications to Appraiser Independence Requirements (AIR) draw renewed attention to the required focus of picking the right vendor.

We’ve written and talked about appraiser quality and selection before, and I still think this is an area that (if given the attention it requires) will drive a lot of improvements across the entire process. The inconsistency in appraisal quality is a staggering problem, but until lenders are required to pick the best appraiser or vendor rather than picking based on relationships or preference of a loan team, we aren’t going to force the appraisal industry to improve their ability to deliver higher quality reports.

The most important thing a lender can do right now is make sure they are defining criteria and tools to make sure they are only using the vendors that are delivering quality collateral reports to them.

HW: What tools does Jaro offer to help AMCs, appraisal desks and lenders manage risk?

GB: Jaro is more than just an order management platform. We have a full end-to-end product suite that allows us to have a hand in the entire collateral risk process and report. Our platform consists of three products, JaroDesk (Order & Vendor Management), JaroKit (Report Writing Tools) and JaroInspect (Property Inspection Data Collection). Within our platform, lenders, AMCs, and even appraisers can get all the tools they need to obtain property data and valuation reports.

Our vendor management capabilities are constantly growing. We have ways of identifying which appraisers are updating their appraisal practices to be better data driven analysis rather than relying on outdated appraisal techniques. We can then use these items to predict the likelihood of an appraiser delivering an appraisal report that is going to have quality issues. We hope to put these tools in the hands of our customers and drive the conversation with appraisers in the industry that it’s time we start improving our processes and quality.

Through this entire platform, we inject a slew of data collection and overlay that with artificial intelligence (AI) and machine learning tools to help inform the next decision. Our goal is to provide collateral risk parties to get access to everything they need to make the right decisions throughout the entire process.

To learn more about Jaro, visit  tryjaro.com .

3d rendering of a row of luxury townhouses along a street

Remember me

Don't have an account? Please Sign Up

how to do collateral assignment

How to remap Copilot to any key on Windows 11

Do you want a physical dedicated key to access Copilot? Here's how on Windows 11.

Remap Copilot key

On Windows 11 , new computers start shipping with a dedicated button to get quick access to Copilot. However, since this is a physical addition to the keyboard, the existing devices won't have a dedicated physical option to access the chatbot.

Of course, you can use the "Windows key + C" keyboard shortcut or the Taskbar button to open the chatbot interface. Microsoft is even trying to open the Copilot panel automatically on devices with monitors equal to or larger than 27 inches. However, if you want to open Copilot on the desktop with a dedicated key, it's still possible to do this by remapping any key on the keyboard to the Copilot shortcut.

Although you have many ways to do this using different tools, you can also use PowerToys, which includes  many useful features  to improve your productivity in addition to the remap tool, and it's a more universal solution that will apply to everyone and not only to users with specific keyboards.

In this how-to guide , I'll walk you through the steps to remap Copilot to any key on the keyboard on Windows 11.

How to assign Copilot a specific keyboard key on Windows 11

Windows 11 doesn't include an app for key remapping, but you can use the remap tool available in PowerToys. If you already have the app on your computer, skip the installation and jump to the remapping instructions.

1. Install PowerToys

To install PowerToys on your computer, use these steps:

  • Open  Microsoft Store  app.
  • Search for  Microsoft PowerToys  and click the top result to open the app page.
  • Click the  Get  (or  Install ) button.

You can also download the app from the official  GitHub page . 

2. Remap Copilot key 

To remap the Copilot shortcut to a specific key on the keyboard, use these steps:

  • Open  PowerToys
  • Click on  Keyboard Manager .
  • Turn on the  "Enable Keyboard Manager"  toggle switch.
  • Click the  "Remap a key"  setting under the "Key" section.
  • Click the  "Add key remapping"  button.
  • Click the  Select  button in the "Select" section.
  • Press the key to use to open Copilot on Windows 11.
  • Click the  OK  button.
  • Choose the  "Key/Shortcut"  option in the "To send" section.
  • Click the  Select  button.
  • Select the Copilot keyboard shortcut (Windows key + C) to record it.
  • Click the  OK  button from the top-right corner.
  • Click the  Continue anyway  button.

Once you complete the steps, press the assigned key to open Copilot. 

While remapping my keyboard for this guide, I noticed that the action didn't execute right away after I pressed the key, but after a few presses, the mapping started working as expected.

More resources

For more helpful articles, coverage, and answers to common questions about Windows 10 and Windows 11, visit the following resources: 

  • Windows 11 on Windows Central — All you need to know
  • Windows 10 on Windows Central — All you need to know

Get the Windows Central Newsletter

All the latest news, reviews, and guides for Windows and Xbox diehards.

Mauro Huculak

Mauro Huculak is technical writer for WindowsCentral.com. His primary focus is to write comprehensive how-tos to help users get the most out of Windows 10 and its many related technologies. He has an IT background with professional certifications from Microsoft, Cisco, and CompTIA, and he's a recognized member of the Microsoft MVP community.

  • 2 Microsoft News Roundup: Call of Duty on Game Pass, XPS 14 & 16, and more reviews than you can shake a stick at
  • 3 Best Helldivers 2 stratagems: Tier list, for early game, solo, bugs, and Automatons
  • 4 Elden Ring: Shadow of the Erdtree is this year's most anticipated DLC, and you can pre-order at a discount — here's how
  • 5 Starship Troopers star "can't wait to play" Helldivers 2, suggests a collab I'd kill to see: "Maybe we should do a crossover movie?!"

how to do collateral assignment

Advertisement

Supported by

Donald J. Trump Is Racing Against Time to Find a Half-Billion Dollar Bond

After losing two civil trials, the former president must find a bonding company that will vouch for him — or his real estate empire is threatened.

  • Share full article

Donald Trump walking in a courthouse hall in a navy suit and blue tie.

By Ben Protess and Jonah E. Bromwich

Donald J. Trump is on the clock.

The $454 million judgment that a New York judge imposed on Mr. Trump in his civil fraud case took effect on Friday, placing the former president in a precarious position.

Now, he must either come up with the money quickly or persuade a company to post a bond on his behalf, essentially vouching for him to the court with an I.O.U.

The bond is likely to be his best bet: Mr. Trump, who also faces an $83.3 million judgment in an unrelated defamation case, does not have enough cash on hand to do it all himself, according to a recent New York Times analysis of his finances . If Mr. Trump can find a bond company willing to do a deal this big, it will require him to pay the firm a fee as high as 3 percent of the judgment and to pledge collateral.

The bond would prevent the New York attorney general’s office, which brought the civil fraud case against Mr. Trump, from collecting the $454 million while Mr. Trump’s appeal is heard. Without it, the attorney general, Letitia James, is entitled to collect at any moment.

Ms. James is expected to allow Mr. Trump up to 30 days, but if he fails to secure a bond by March 25, and an appeals court denies him extra time, he has a lot to lose. The attorney general’s office could seek to seize some of Mr. Trump’s properties in New York, perhaps even a crown jewel like Trump Tower or 40 Wall Street.

“The attorney general is in the catbird seat and can make this a very unpleasant experience for Trump,” said Mark Zauderer, a partner at the law firm Dorf Nelson & Zauderer who is a veteran New York business litigator and has secured many appeal bonds.

As Mr. Trump races to secure a bond, here is what we know about this perilous new phase.

Why does Trump owe $454 million?

Ms. James took Mr. Trump to trial last year, accusing him of orchestrating a conspiracy to inflate his net worth to receive favorable loans. This month, the judge Arthur F. Engoron ruled that Mr. Trump had done so and meted out several punishments.

The most severe was a $355 million penalty — $454,156,783.05 as of Friday afternoon, thanks to interest that continues to accrue. The judge said the sum accounted for Mr. Trump’s ill-gotten gains from the scheme.

Nearly half of the base penalty, $168 million, reflected the interest that Mr. Trump had saved by misleading lenders, while the remaining amount represented his purported profit on the recent sale of two properties. The judge’s penalty essentially clawed back that money, and it will go into New York State’s coffers if the ruling is upheld on appeal.

What is an appeal bond?

In theory, Mr. Trump has two options to prevent Ms. James from collecting while he appeals. He can either write a check for more than $450 million to New York State, which will then hold the money in escrow, or he can secure an appeal bond from a specialized company licensed to provide them.

In reality, unless Mr. Trump reaps a sudden and unexpected windfall, a bond is the only way to go.

Mr. Trump’s net worth, which he estimates to be in the billions, is largely derived from the value of his real estate, not cash. As of last year, he was sitting on more than $350 million in cash — as well as stocks and bonds he can sell in a hurry — but that stockpile is well short of what he needs, according to The Times’s review of his financial records. Justice Engoron’s $454 million judgment and the $83.3 million judgment Mr. Trump is facing from the defamation trial involving the writer E. Jean Carroll will collectively eclipse the former president’s cash reserves, forcing him to seek out a bond in both cases.

For now, he has not secured appeal bonds in either case. On Friday, Mr. Trump’s lawyers in the defamation case asked a judge to either grant him more time or reduce the size of the bond.

At its most basic, an appeal bond is a document filed with a court by a bonding company, a financial institution that promises a judgment will be paid. Under New York law, a defendant also owes 9 percent interest to the plaintiff until the judgment is paid or the appeal is resolved, an amount that is reflected in the size of the bond.

As such, Mr. Trump’s bond might creep up to nearly $500 million.

But the company providing the bond will be on the hook if Mr. Trump loses his appeal and fails to pay — and so it will want the former president to have skin in the game.

To secure the bond, Mr. Trump will have to pledge collateral to the company, including cash, stocks and bonds. Although each deal is different, companies offering appeal bonds generally shy from taking property as collateral, especially if a building already has a mortgage, experts said.

It won’t be cheap. Mr. Trump will have to pay the company a premium fee, typically anywhere from 1 to 3 percent of the bond.

What happens if he doesn’t secure a bond?

While there is no indication that Mr. Trump will fail to line up a bond, it is easier said than done.

Only about a dozen bonding companies licensed in New York have the ability to handle a judgment of this size, experts said. And while some might salivate at the possibility of collecting a huge premium, others might be spooked by the sheer size of Justice Engoron’s penalty, or by being associated with Mr. Trump’s polarizing politics and his litigious nature.

Bonds this large are typically found in cases against big companies, not individual businessmen, even wealthy ones like Mr. Trump.

“For an individual, this amount is unprecedented,” said Neil Pedersen, the owner of Pedersen & Sons, a surety bond agency in New York that is not involved in the Trump case.

Mr. Trump is also a unique defendant: He is the front-runner for the Republican presidential nomination, and if he reclaims the White House, it could be difficult for the bonding company to collect from a sitting president, particularly one who has stiffed lenders and lawyers in the past.

“I wouldn’t be surprised if he gets it, or if he doesn’t,” Mr. Pedersen added.

If he doesn’t, that is where things could get ugly for the former president. Ms. James has a number of tools to freeze his assets and ultimately recover the money.

With help from a sheriff, she can collect from any entity holding Mr. Trump’s assets, like a bank, as well as from anyone who owes Mr. Trump money, like a tenant in one of his buildings. Perhaps most important, she can file liens on his marquee New York properties, potentially setting in motion a seizure of the buildings.

In a recent interview with ABC News , Ms. James said as much, hinting that she had her eye on one of Mr. Trump’s buildings in Lower Manhattan, a five-minute walk from her office.

“We will ask the judge to seize his assets,” Ms. James said in the interview, adding, “I look at 40 Wall Street each and every day.”

Can he delay the bond?

He can try, but the decision is not in his hands.

In federal court, Mr. Trump would have 30 days to secure the bond, but this case is in New York State Court, where no grace period exists. Ms. James, though, is expected to allow him that time to line up a bond, a window that closes on March 25 — which happens to be the first day of his first criminal trial, to be held in Manhattan.

Mr. Trump can also ask an appeals court to pause the requirement that he post a bond — and to reduce the size of the bond to something more manageable.

Can Trump supporters bail him out?

It’s complicated.

The New York court system relies on trusted companies, regulated by the state, that have a lengthy track record of posting bonds.

In contrast, an I.O.U. from a wealthy Trump supporter is unlikely to pass muster with the attorney general, Mr. Zauderer said, and the appeals court could refuse to accept it.

While there is nothing to stop one or several of Mr. Trump’s billionaire benefactors from paying off his entire $450 million debt, that seems somewhat far-fetched. Not only would it require laying out a huge sum, but it would also lead to a significant tax bill for the donor or donors.

Grassroots efforts are unlikely to make a significant dent in Mr. Trump’s debt. In the last eight days, a GoFundMe campaign has raised more than $1 million from over 20,000 supporters.

Unless a more substantial bailout emerges, Mr. Trump will have to pay most of the penalty out of his own pocket, assuming Justice Engoron’s decision is upheld. To do that, Mr. Trump might have to sell or mortgage one of his properties.

And then there’s his run for the White House, which could constrain him further.

The former president has used a political action committee in his control to pay for lawyers and witnesses in his legal cases. But that committee does not have enough money to address the penalties he is facing. A super PAC coordinating with his candidacy is legally banned from coordinating with him and cannot pay the judgments.

Ben Protess is an investigative reporter at The Times, writing about public corruption. He has been covering the various criminal investigations into former President Trump and his allies. More about Ben Protess

Jonah E. Bromwich covers criminal justice in New York, with a focus on the Manhattan district attorney's office, state criminal courts in Manhattan and New York City's jails. More about Jonah E. Bromwich

‘Who’s going to do that?’: Trump faces hurdles in securing appeal bond for fraud case

Donald Trump speaks

Former President  Donald Trump  is gearing up to fight a massive fine in the New York business  fraud  case that  threatens  to erase most of the  cash  he says he has on hand.

But first, he has to secure a bond — and that might not be so easy.

Trump on Friday was ordered to pay about  $355 million in penalties , plus more than $98 million in interest after a judge found the former president liable for fraud for manipulating financial statements given to lenders. Every day, the accruing interest adds $87,502 to Trump’s bill.

Unless he wants to pay the entire penalty while his expected appeal is considered, Trump will need to post an appeal bond. This is typically up to 120% of the judgment plus the current interest.

At that rate, Trump’s original ruling with interest would indicate he will need to secure a bond worth more than $540 million. But it’s unlikely that the real estate baron will be able to use his properties as collateral.

It’s “not very attractive to take real estate as collateral,” said Neil Pedersen, owner of New York-based surety bond agency Pedersen & Sons.

Trump could have to liquidate some assets in order to secure a bond, said Pedersen. The bond company will also charge a fee that could total millions of dollars.

An appeal of Judge Arthur Engoron’s ruling could take years to play out.

Another complicating factor: Trump’s status as a presidential frontrunner.

It’s an “unprecedented” situation for a potential bond company to commit to, Pedersen said.

“No one’s ever had to enforce an indemnity agreement against what could very well be the next U.S. president,” he said.

Trump has vowed to appeal Engoron’s ruling, which threatens not just his bottom line, but his entire persona as a mega-rich business genius, one that he has carefully cultivated for decades.

But bond agents may have reservations about working with Trump, whose business practices and claims about his wealth have been successfully challenged in court.

Appeal bonds are used to ensure that a person ordered to pay a judgment cannot misuse the courts to delay or avoid making that payment.

“Who ever is going to bond [Trump] is committing that they’re going to make good on that judgment,” said New York business attorney David Slarskey. “Who’s going to do that?”

Trump, who said in a  deposition  last year that he had “substantially in excess of $400 million in cash,” could technically deposit the full judgment against him, plus interest, as he challenges the judgment. But his lawyer has already said that he will secure a bond.

“We have to post the bond, which is the full amount and some,” Trump attorney Alina Habba told Fox News on Monday.

“We will be prepared to do that,” she said.

Habba said she expects to post a roughly $400 million bond within a 30-day window to file a notice of appeal, which begins after a court clerk enters Engoron’s final judgment.

Engoron also barred Trump for three years from running a business in New York or applying for loans from financial institutions registered with the state.

Habba also appeared to dismiss a question about whether Trump will have to sell off his New York real estate assets as his legal troubles mount.

But Pedersen warned that doing so could cause its own “headache.”

Those assets are not liquid, so if Trump loses the appeal, the process of converting them to cash could be difficult — perhaps even more so in a case that was centered around disputes about the value of Trump’s properties.

Habba did not immediately respond to questions from CNBC about the process of securing an appeal bond.

Engoron’s judgment in Manhattan Supreme Court came weeks after a jury in a separate civil case in New York federal court ordered Trump to pay  $83.3 million  for defaming writer E. Jean Carroll. That’s on top of the  $5 million  that Trump has already been ordered to pay in a separate defamation case brought by Carroll.

After that case was adjudicated, the former president took the unusual step of setting aside a cash deposit of $5.6 million while he pursued an appeal.

Trump critic and attorney George Conway, suggested that Trump was unable to secure an appeal bond from a third party. Trump’s lawyers denied this, saying he merely wanted to avoid additional fees that would be charged by a bond company.

But as Trump’s legal penalties soar past the half-billion-dollar mark, Slarskey and  others  have predicted that Trump may soon declare  bankruptcy .

Forbes estimated Trump’s net worth to be  roughly $2.6 billion  as of February.

IMAGES

  1. Guidelines for Collateral Assignment of Life Insurance

    how to do collateral assignment

  2. Collateral Agreement

    how to do collateral assignment

  3. Report assignment

    how to do collateral assignment

  4. Collateral Assignment Ca 1

    how to do collateral assignment

  5. Collateral Assignment

    how to do collateral assignment

  6. Release Of Collateral Assignment Form

    how to do collateral assignment

VIDEO

  1. OMG 🤯 #cod #collateral #rank

  2. Collateral Beauty

  3. Video 2 Collateral Assignment Opportunities

  4. World's Reaction to Conflict: Impactful Retaliation and Collateral Damage #srk #viral #interview

COMMENTS

  1. Collateral Assignment: All You Need to Know

    A collateral assignment involves granting a security interest in the asset or property to a lender. It is a lawful arrangement where the borrower promises an asset or property to the lender to guarantee the debt repayment or meet a financial obligation.

  2. A Collateral Assignment of Life Insurance

    A collateral assignment of life insurance is a conditional assignment appointing a lender as an assignee of a policy. Essentially, the lender has a claim to some or all of the death benefit...

  3. What Is Collateral Assignment?

    Via collateral assignment of your policy, you authorize the insurance company to give the lender the amount you owe if you're unable to keep up with payments (or if you die before repaying the loan). Lenders have two ways to collect under a collateral assignment arrangement:

  4. Collateral Assignment of Life Insurance

    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 lender can collect the...

  5. PDF INSTRUCTIONS FOR COLLATERAL ASSIGNMENT FORM Step 1

    INSTRUCTIONS FOR COLLATERAL ASSIGNMENT FORM Step 1 - Print and Complete Form. Definitions: Assignor - The person to give or share certain contractual rights by this assignment, generally the contract owner or authorized representative. Assignee - The person or entity to receive certain contractual rights by this assignment.

  6. What Is Collateral Assignment of Life Insurance?

    What is collateral assignment of life insurance? Life insurance can act as collateral for you to secure a loan. With a collateral assignment, the payout from your insurance goes to pay your loan balance first, and your loved ones will get to keep any remaining money.

  7. What Is a Collateral Assignment of Life Insurance?

    One way to provide collateral for the loan is to use your life insurance policy. If you die before fully repaying the loan, the policy's death benefit will reimburse your lender first. Then, any remaining funds will go to your beneficiaries.

  8. What is a Collateral Assignment of Life Insurance?

    With collateral assignment of life insurance, ownership of an asset transfers from the borrower to the lender. This transfer only remains in place until the loan is paid in full. In this situation, the transferred asset is your life insurance policy. The goal is only to satisfy your loan obligation.

  9. Collateral Assignment of Life Insurance

    How does collateral assignment of life insurance work? If you die before fully repaying your loan, collateral assignment will allow the lender, or "assignee," to be repaid for the outstanding loan amount using your death benefit.

  10. What Is A Collateral Assignment Of Life Insurance?

    A collateral assignment is a process by which a person uses their life insurance policy as collateral for a secured loan. In simple terms, collateral assignment is reassigning priorities for who gets paid the death benefit of your life insurance policy. What Is a death benefit?

  11. The Complete Guide to Using Life Insurance as Collateral 2023

    1. Ensure the lender accepts life insurance as collateral. 2. Apply for the collateral assignment through the bank or directly with the insurer. 3. Fill out an "assignment of Life Insurance Policy as Collateral form" provided by your insurer. 4. Submit the form to the insurer, and wait for approval. 5.

  12. Guidelines for Collateral Assignment of Life Insurance

    A collateral assignment of insurance is a conditional assignment appointing a lender as the primary beneficiary of a benefit to use as collateral for a loan. If the borrower is unable to pay, the lender can cash in the insurance policy and recover what is owed. An Absolute assignment in insurance involves signing over your entire policy to ...

  13. What Is Collateral Assignment of Life Insurance?

    If you have a $500,000 life insurance policy and die while still owing $50,000 on a business loan, the lender could claim $50,000 of your death benefit — assuming, of course, that you listed that lender as a collateral assignee.

  14. Collateral Assignment of Life Insurance

    Here's how to apply for collateral assignment of life insurance: 1. Know the requirements Knowing life insurance collateral requirements is vital before applying for collateral assignment. Lenders generally require an active life insurance policy with cash value. This means that a term life insurance policy may not qualify.

  15. What Is A Collateral Assignment?

    The collateral assignment of life insurance DOES make sense if: You are in the process of securing a loan with a collateral assignment stipulation. You do not have cash reserves to use as collateral for loan approval. The collateral assignment of life insurance does NOT make sense if: Your loan can be approved without a collateral requirement.

  16. How Is A Collateral Assignment Used In A Life Insurance Contract

    1. Access to Funds. One of the primary benefits of a collateral assignment is the ability to access funds without surrendering the life insurance policy. By using the death benefit as collateral, the policyholder can secure a loan or obtain financing for personal or business purposes.

  17. What Is Collateral Assignment?

    March 26, 2021 In this article... Life insurance has many different, creative uses. Learn about life insurance assignments, or, collateral assignments and how they can be used to secure a loan. There are many creative uses for life insurance. You can use it for a lot more than just paying for your funeral or covering debts you leave behind.

  18. Collateral Assignment for Life Insurance: Benefits & More

    Collateral assignment of life insurance allows the lender to be the primary recipient of your life insurance policy's death benefit if you have an outstanding loan balance when you die. Some assignments also allow the lender to tap into the policy's cash value if you default on your loan.

  19. Life Insurance Collateral Assignment [Pros and Cons]

    How the Life Insurance Collateral Assignment Process Works. If you plan to use a life insurance collateral assignment strategy when applying for a loan, you should go through the following steps in order: Understand the requirements. First, you should know the type of policy a lender will accept as collateral - or even if a lender will accept ...

  20. What Is Collateral Assignment of Life Insurance?

    Key Takeaways Collateral assignment allows you to use a life insurance policy as assurance for a loan. The lender gets first claim on the death benefit if you default. Permanent life insurance policies like whole life and universal life are commonly used since they don't expire. Term life may also be accepted.

  21. What Is Collateral Assignment of Life Insurance?

    Collateral assignment involves using a life insurance policy as security for a loan, where the lender has a claim on the death benefit if the borrower defaults or passes away before repaying the loan.

  22. How Is Collateral Assignment Used In A Life Insurance Contract?

    Collateral Assignment vs. Unsecured Loans: Unsecured loans, such as credit cards or personal lines of credit, do not require any form of collateral. While unsecured loans generally have higher interest rates, collateral assignment can provide borrowers with more favorable terms due to the reduced risk to lenders. Collateral assignment also ...

  23. Collateral Assignment of Life Insurance

    Step 5: While collateral assignment is active, policy control may be limited. The specifics of what actions are permissible can vary, so reviewing the terms of the loan and collateral assignment agreement is essential. Step 6: Collateral assignment terminates when the loan is paid. Your full ownership rights are then restored.

  24. What should lenders consider in 2024 for collateral risk?

    Appraisal modernization is about getting better property data to improve automated collateral risk decisions in the future. ... Finding the right vendor for an assignment is the No. 1 factor in ...

  25. 8 Tips for Developing Your Leadership Skills

    This can be through a stretch assignment or a project that gets you out of your comfort zone. Other options are working in a new department or geographical location to practice using the new strategies you're learning. Start small, reflect on your experiences, and identify which techniques are working and which you need to refine. ...

  26. How to remap Copilot to any key on Windows 11

    (Image credit: Mauro Huculak) Click the OK button from the top-right corner.; Click the Continue anyway button.; Once you complete the steps, press the assigned key to open Copilot. While ...

  27. What to Know About Trump's $454 Million Bond From His Fraud Trial

    Donald J. Trump is on the clock. The $454 million judgment that a New York judge imposed on Mr. Trump in his civil fraud case took effect on Friday, placing the former president in a precarious ...

  28. 'Who's going to do that?': Trump faces hurdles in securing appeal bond

    It's "not very attractive to take real estate as collateral," said Neil Pedersen, owner of New York-based surety bond agency Pedersen & Sons. Trump could have to liquidate some assets in ...

  29. What to know about South Carolina's Republican primary

    Former President Donald Trump has a lead in the Republican presidential primary, but the process is far from over. The next step is South Carolina's primary, which takes place on Saturday ...