I am no expert in Life Insurance as I am a P&C guy. I have a client that has a term policy. He recently got a large business loan and is needing to collaterally assign a portion of the death benefit to the bank.
He needs $150k assigned for the loan, but the actual loan amount is over $1M. His policy is only for $650k. In the Collateral Assignment he signed with the bank, it specifies the amount to be assigned as the $150k.
If he were to pass away, could the bank receive the full death benefit since it's assigned to them? Or does the verbiage stating the assigned amount only being $150k protect him? For the beneficiaries, do I keep them as 100% and then the bank would get their $150k?
This is probably a simple question, just want to make sure he's protected.
Thanks!
He needs $150k assigned for the loan, but the actual loan amount is over $1M. His policy is only for $650k. In the Collateral Assignment he signed with the bank, it specifies the amount to be assigned as the $150k.
If he were to pass away, could the bank receive the full death benefit since it's assigned to them? Or does the verbiage stating the assigned amount only being $150k protect him? For the beneficiaries, do I keep them as 100% and then the bank would get their $150k?
This is probably a simple question, just want to make sure he's protected.
Thanks!
