Yes! Term policies can be used for collateral assignments. If you have a policy with us and would like to do a collateral assignment, we'd be happy to walk you through the process. Email us at help@ladderlife.com for more information.

What is a collateral assignment and how does it work?

A collateral assignment of life insurance is a contract that allows the death benefit of a policy to be used as collateral, typically in the context of a bank loan. The collateral is assigned to ensure that the lender recovers the debts that are owed. In the event of the insured person’s death, the lender who has the insurance policy assigned as collateral gets paid first, up to the amount remaining on the loan. That means that the collateral assignment takes precedence over all other beneficiary claims.

It’s important to remember to never name the lender as the primary beneficiary of the policy. You don’t want the entire death benefit to go to the lender. The benefit should be reserved for your loved ones.