What is the definition of Collateral Assignment?
Collateral Assignment temporarily transfers a portion of the ownership rights of a life insurance policy or annuity contract. The life insurance policy or annuity contract is used as collateral in order to secure a loan. The borrower which is the owner of the annuity or policy signs off the asset to a creditor. Once the loan is fully paid up, the full ownership reverts back to the policy or annuity owner.
This protects the creditor from the death of the borrower. In the event of the borrower's death before the loan is paid, a portion of the death benefit of the policy or the cash surrender value of the annuity is paid to the creditor. The amount is equal to the balance of the outstanding loan. The beneficiaries of the borrower then get the rest of the benefits.
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- Collateral Source Rule
- Collision Coverage
- Combined Ratio
- Commercial General Liability Insurance (CGL)
- Commercial Lines
- Commercial Multiple Peril Policy
- Commercial Paper
- Commission
- Community Rating Laws
- Commutative Contract
- Collateral
- Coinsurance
- COBRA
- Claims Made Policy
- Chartered Property/Casualty Underwriter (CPCU)
- Chartered Life Underwriter (CLU)
- Chartered Financial Consultant (ChFC)
- Cell Phone Insurance
- Catastrophe Reinsurance
- Catastrophe Model