what action can a policyowner take if an application for a bank loan requires collateral? This is a topic that many people are looking for. thetruthaboutdow.org is a channel providing useful information about learning, life, digital marketing and online courses …. it will help you have an overview and solid multi-faceted knowledge . Today, thetruthaboutdow.org would like to introduce to you How to Use Term Life Insurance As Collateral for a Loan. Following along are instructions in the video below:
“I m wayne blanchard. I m a certified financial planner and a member of the the gear planning network. We re gonna talk about how to use term life insurance collateral for a loan well i hate to say it. But the quick and dirty answer to that question is you can t use this term life insurance as collateral for a loan collateral for a loan comes into play as something that would stand good for that loan.
If you no longer are paying on that loan all right term life insurance has no cash value therefore. If you re still alive..
A term life insurance policy. Would do no good as far as helping the lender pay off that loan as far as being able to say okay. You didn t pay me back the money you owe me i m gonna cash in this term. Life insurance policy.
So a term life insurance policy. Can t be used for that now having said that let me let me think about a couple of other things..
A whole life insurance policy or a variable universal life policy could have cash value. And you can use those as collateral for a loan. Normally you can borrow up to there up to their cash value you could borrow that from the insurance company or you could borrow it from the from a lender. You can do it you can take a cash value life insurance policy and if it is assignable you have to check that in the policy.
If the policy is assignable you can borrow the money from a normal lending institution. A credit union or a bank or that type of thing all right now..
There is there could be a situation where the bank would require you to get a term life insurance policy. When you get a loan. It s not as collateral for the loan. But again one of the key questions is what is your ability to pay if you die you lose your ability to pay so they want to know that if you die.
Where s the money going to come from to pay off the loan. So they could require you to have a term life insurance policy..
That covers at least the term of the loan in order to back it up credit life insurance that most lenders sell you is very expensive and they cannot require you to buy credit life insurance from the bank. But they can require that you do provide some type of life insurance. That shows that if you die this loan would be paid off. So that would be a way that term life insurance could be required on a loan.
But it cannot be collateral for a loan have a great day ” ..
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