Which lenders offer collateral assignment loans?

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PostPosted: Mon Aug 08, 2011 3:34 pm   Post subject: term policies lenders  

Could you tell me who is lender on term callateral loan.


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findingalender
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PostPosted: Mon Aug 08, 2011 7:22 pm   Post subject:   

Whoever has the money to offer in exchange for some or all of the insurance proceeds, and is willing to wait until the insured dies to collect it, is the lender.



Next question?



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PostPosted: Sat Sep 08, 2012 12:26 pm   Post subject: TERM LIFE AS COLLATERAL FOR LOAN  

PLEASE- SEND ME INFORMATION ON NAMES OF LENDERS ETC. HOW WILL EXCEPT TERM LIFE INSURANCE AS COLLATERAL FOR A LOAN.


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anonymousJOHN H. BURCKHAR
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PostPosted: Mon Sep 10, 2012 12:50 am   Post subject:   

Please don't SCREAM at us. We don't have the information you are seeking. Whatever sources of loaned money you can think of on your own are the ones that might consider taking a collateral assignment of your life insurance.



Often times, collateral assignments are negotiated at or before the time a policy is taken, as assurance of some other performance -- such as a split dollar plan of insurance between an executive and their employing corporation. They are rarely used with term life insurance.



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PostPosted: Fri Jan 04, 2013 8:06 am   Post subject: Collateral whole life loan  

I have a 1,000,000 dollar face value new whole life policy with 9k cash value, lisr ect.... Structured very nice. I also have a 1,000,000 face value 10 year term too. I need 250k to expand my business and want to collateralise the policies and I'll pay continue to pay all premiums. Looking for 6% or less interest.



Please call me if you can help 702-686-7109


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Franklyn
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PostPosted: Fri Jan 04, 2013 3:51 pm   Post subject:   

You should not post your phone number here. An email address would be a bit safer. Regardless, you have no idea who it is who is calling you, and should avoid this kind of solicitation.



Talk to a commercial bank or credit union in your town about a collateral assignment of the whole life policy. The term policy is probably unacceptable unless the remaining term is longer than the repayment period of the loan.



The interest rate you get has nothing to do with the collateralization of the policy, but everything to do with your personal creditworthiness. You might be able to get a business start-up loan for 6% to 8% in today's environment.



You could also apply for an SBA loan, which would not necessarily require collateralization of your life insurance, but if it did, the SBA lender would most likely agree to it, since the government is guaranteeing the loan interest.



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PostPosted: Fri Jan 04, 2013 5:42 pm   Post subject:   

You will be able to get or not get a loan based upon your general credit worthiness. The life insurance policies on their own won't allow you to get the loan. They will only be helpful to the extent that their is concern about repayment at your death.



In other words, if you aren't a good enough credit risk, the life insurance won't change this.


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fjavmaru
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PostPosted: Thu Apr 25, 2013 2:51 pm   Post subject: Need a lender that does collateral assignment loans  

Does anyone know of a Lender that does collateral assignment loans?


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busilady
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PostPosted: Thu Apr 25, 2013 4:35 pm   Post subject:   

If you need collateral, it means that the lender doesn't trust that you'll pay back the loan. If you aren't going to die soon, a term policy is pretty bad collateral.


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PostPosted: Sat Dec 06, 2014 5:12 pm   Post subject: term life insurance as collateral  

$100,000 term life insurance issued in 2004. How can a portion of this be used to secure loan for personal debt


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gordy99
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PostPosted: Thu Dec 11, 2014 6:29 am   Post subject: loan using life insurance as collateral  

Can I find a lender


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brinda
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PostPosted: Tue Jan 27, 2015 2:38 pm   Post subject: collateral assignment  

I was hoping to get a collateral loan to clean up some bills and have some savings set up. I have a GUL policy for 260K, that i am putting in cash accumulation as well. Any ideas of banks in iowa that would do a collateral loan against it?


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jthowell
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PostPosted: Tue Jan 27, 2015 6:36 pm   Post subject:   

How much do you need to borrow and how much cash surrender value do you have in your life insurance policy? What is your age? In your situation, you may just need a different plan to get out of debt without more borrowing. Have you even considered that as an alternative?



Borrowing from your GUL policy would be likely to terminate the guarantees, but you have to read the contract to see for sure. Making a collateral assignment of the death benefit would probably not do that.



However, simply having a $260,000 policy does not mean that you will find someone willing to take a collateral assignment. Your general creditworthiness will determine that, just like any other loan.



There are, to the best of my knowledge, no banks that "specialize" in taking collateral assignments of life insurance. They always look at each loan application on its own merits. If you have other collateral, such as a home, they would be more interested in that, because it is a "marketable" asset.



Life insurance is an illiquid asset. In other words, you could put an ad in a newspaper, "For Sale: $260,000 Life Insurance policy. $10,000 down and take over payments." and probably never receive an inquiry. Liquid assets are those which have a ready and willing pool of buyers waiting to make a purchase. Don't believe an insurance agent or real estate agent who tells you that your life insurance or the home you plan to live in is an investment.



Having said that, there are "investors" looking to buy high value life insurance policies . . . from very old or very sick persons who are not expected to live much longer. But they generally are looking for policies valued at $500,000 to $1,000,000 and higher, because they are trying to make a quick profit on the deaths of human beings. This is part of what's known as the life settlement business, and it is now highly regulated by most states. There have been many unscrupulous companies operating in this arena for the past 10-20 years, and thankfully most are out of business today. Many of the Life Settlement companies operating today are reputable and completely above board, but there are still some flakes out there. So caveat emptor.



Investments are either liquid or illiquid, and a person who owns an illiquid investment must find his or her own purchaser in the event of a need to sell. A person's own residence and life insurance are illiquid assets, and generally not considered investments. Try selling your home when interest rates are high, unemployment is out of control, you are being relocated by your employer to avoid unemployment, and your home is appraised at $100,000 less than what you owe the mortgage lender. A veritable impossibility. Ask anyone who experienced that in the past 5-7 years.



On the other hand, homes or other real estate a person owns which are intended to provide regular income are in a different category. Those are investments, but still considered illiquid -- because they are only marketable if there are willing buyers. On the other hand, stocks and bonds traded on exchanges are generally considered liquid because there are investors waiting to buy if someone is willing to sell. But even a stock or bond can become illiquid if the corporation goes bankrupt -- such as an Enron or Global Crossing -- leaving investors with nothing to show for their investment.



The bank would look at life insurance in the same manner. If you default on the loan, and you stop paying insurance premiums, what do they have? A debt with little chance of collecting unless they keep making the premium payments until you die, because they probably can't sell the policy to someone else if you're under 70 or 80 years of age under those conditions. At least it's still a crime for them to hire someone to "take care of you" so they could collect the death benefit.



Universal life insurance presents its own set of challenges as well. Because the Cost of Insurance RATE is unrelated to the premiums you are paying, which are probably minimal, and you may not even have much in the way of cash value at all, it actually increases every year. The Cost of Insurance DEDUCTION is directly related to your cash accumulation. With little or no cash accumulation, the deduction increases annually (or even monthly in many contracts), and will eventually exceed your "scheduled" premium.



That's why you are paying extra for the "guaranteed" death benefit, and why borrowing from the cash value or taking a partial surrender usually terminates the guarantee. If you lose the guarantee, then you will eventually be forced to pay considerably higher premiums and risk lapsing the policy because it lacks cash accumulation value.



And that's why the bank would be unlikely to look favorably on taking your collateral assignment if your creditworthiness is not pristine.



The most common use of collateral assignment of life insurance proceeds is in the business world. A corporation will purchase and pay for a large life insurance policy on its CEO and other high-ranking or specially skilled employees as a side benefit intended to keep them on staff, with the understanding that the corporation will recoup the premiums it paid when the executive dies. The executive's beneficiary receives the full amount of the promised death benefit, and the corporation gets back all the premiums it paid, because the face amount of life insurance is "grossed up" each year by the cumulative amount of premiums paid. The executive must sign a collateral assignment agreement to permit this.



If the executive later chooses to leave the company, he may have the right to purchase the policy from the corporation for the amount of premiums it paid. He can do this by allowing the corporation to withdraw its cost-basis and obtaining a release of the assignment from the corporation. The corporation, as policyowner, can also borrow or withdraw some or all of its cost-basis at any time, reducing the amount of remaining collateral assignment. If the corporation does not sell/transfer ownership of the policy to the executive, it has the legal right to continue paying premiums and collect the full death benefit when the executive later dies.



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PostPosted: Wed Mar 25, 2015 3:34 am   Post subject:   

have a million dollar term life ins policy, need to have 350,000.00 to pay off a debt. Live in NC,


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PostPosted: Wed Mar 25, 2015 3:01 pm   Post subject:   

Not likely to happen. You have a policy with no cash value and a limited duration. If you can't show the means to repay the existing $350,000 debt, how would you show the means to repay a $350,000 life insurance loan if you don't die before the policy does?



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