Life insurance as business loan collateral.

How it works:

You (or your business) own the life insurance policy, choose your beneficiary, and make the policy premium payments. If you already own a life insurance policy (and your insurer allows it), you can assign part of your existing policy as collateral coverage. Or you can purchase a new policy that includes your lender as an assignee on the policy.

While your loan is in effect, your lender retains “collateral assignment” of the policy. That means if the person insured by the policy dies while the loan is in effect, your lender has the right to claim a portion of the policy proceeds equal to the outstanding loan balance. Any remaining proceeds are paid to the beneficiary you’ve named.

The collateral assignment ends when you’ve paid off your loan. Your lender will no longer have any rights to the policy. Your policy remains in effect as long as you continue to make the premium payments (or, in the case of a term life policy, the term is completed) and can be used for other business planning needs, such as buy-sell agreement funding or key person protection.

Reach out to me and get your policy in place today. redacted