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What Is a Collateral Assignment of Life Insurance?

Charlene Rhinehart is a CPA , CFE, chair of an Illinois CPA Society committee, and has a degree in accounting and finance from DePaul University.

A collateral assignment of life insurance is a conditional assignment appointing a lender as an assignee of a policy. Essentially, the lender has a claim to some or all of the death benefit until the loan is repaid. The death benefit is used as collateral for a loan.

The advantage to using a collateral assignee over naming the lender as a beneficiary is that you can specify that the lender is only entitled to a certain amount, namely the amount of the outstanding loan. That would allow your beneficiaries still be entitled to any remaining death benefit.

Lenders commonly require that life insurance serve as collateral for a business loan to guarantee repayment if the borrower dies or defaults. They may even require you to get a life insurance policy to be approved for a business loan.

Key Takeaways

• The borrower of a business loan using life insurance as collateral must be the policy owner, who may or may not be the insured.
• The collateral assignment helps you avoid naming a lender as a beneficiary.
• The collateral assignment may be against all or part of the policy's value.
• If any amount of the death benefit remains after the lender is paid, it is distributed to beneficiaries.
• Once the loan is fully repaid, the life insurance policy is no longer used as collateral.

How a Collateral Assignment of Life Insurance Works

Collateral assignments make sure the lender gets paid only what they are due. The borrower must be the owner of the policy, but they do not have to be the insured person. And the policy must remain current for the life of the loan, with the policy owner continuing to pay all premiums . You can use either term or whole life insurance policy as collateral, but the death benefit must meet the lender's terms.

A permanent life insurance policy with a cash value allows the lender access to the cash value to use as loan payment if the borrower defaults. Many lenders don't accept term life insurance policies as collateral because they do not accumulate cash value.

Alternately, the policy owner's access to the cash value is restricted to protect the collateral. If the loan is repaid before the borrower's death, the assignment is removed, and the lender is no longer the beneficiary of the death benefit.

Insurance companies must be notified of the collateral assignment of a policy. However, other than their obligation to meet the terms of the contract, they are not involved in the agreement.

Example of Collateral Assignment of Life Insurance

For example, say you have a business plan for a floral shop and need a $50,000 loan to get started. When you apply for the loan, the bank says you must have collateral in the form of a life insurance policy to back it up. You have a whole life insurance policy with a cash value of $65,000 and a death benefit of $300,000, which the bank accepts as collateral.

So, you then designate the bank as the policy's assignee until you repay the $50,000 loan. That way, the bank can ensure it will be repaid the funds it lent you, even if you died. In this case, because the cash value and death benefit is more than what you owe the lender, your beneficiaries would still inherit money.

Alternatives to Collateral Assignment of Life Insurance

Using a collateral assignment to secure a business loan can help you access the funds you need to start or grow your business. However, you would be at risk of losing your life insurance policy if you defaulted on the loan, meaning your beneficiaries may not receive the money you'd planned for them to inherit.

Consult with a financial advisor to discuss whether a collateral assignment or one of these alternatives may be most appropriate for your financial situation.

Life insurance loan (policy loan) : If you already have a life insurance policy with a cash value, you can likely borrow against it. Policy loans are not taxed and have less stringent requirements such as no credit or income checks. However, this option would not work if you do not already have a permanent life insurance policy because the cash value component takes time to build.

Surrendering your policy : You can also surrender your policy to access any cash value you've built up. However, your beneficiaries would no longer receive a death benefit.

Other loan types : Finally, you can apply for other loans, such as a personal loan, that do not require life insurance as collateral. You could use loans that rely on other types of collateral, such as a home equity loan that uses your home equity.

What Are the Benefits of Collateral Assignment of Life Insurance?

A collateral assignment of a life insurance policy may be required if you need a business loan. Lenders typically require life insurance as collateral for business loans because they guarantee repayment if the borrower dies. A policy with cash value can guarantee repayment if the borrower defaults.

What Kind of Life Insurance Can Be Used for Collateral?

You can typically use any type of life insurance policy as collateral for a business loan, depending on the lender's requirements. A permanent life insurance policy with a cash value allows the lender a source of funds to use if the borrower defaults. Some lenders may not accept term life insurance policies, which have no cash value. The lender will typically require the death benefit be a certain amount, depending on your loan size.

Is Collateral Assignment of Life Insurance Irrevocable?

A collateral assignment of life insurance is irrevocable. So, the policyholder may not use the cash value of a life insurance policy dedicated toward collateral for a loan until that loan has been repaid.

What is the Difference Between an Assignment and a Collateral Assignment?

With an absolute assignment , the entire ownership of the policy would be transferred to the assignee, or the lender. Then, the lender would be entitled to the full death benefit. With a collateral assignment, the lender is only entitled to the balance of the outstanding loan.

The Bottom Line

If you are applying for life insurance to secure your own business loan, remember you do not need to make the lender the beneficiary. Instead you can use a collateral assignment. Consult a financial advisor or insurance broker who can walk you through the process and explain its pros and cons as they apply to your situation.

Progressive. " Collateral Assignment of Life Insurance ."

Fidelity Life. " What Is a Collateral Assignment of a Life Insurance Policy? "

Kansas Legislative Research Department. " Collateral Assignment of Life Insurance Proceeds ."

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Life Events

What Is Collateral Assignment of Life Insurance?

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Updated: December 14, 2023

• How It Works
• Overview of Application Process
• Pros and Cons
• Impact on Beneficiaries
• Alternatives

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Collateral assignment of life insurance is an arrangement where a policyholder uses the face value of their life insurance policy, which can be a term or permanent life insurance policy, as collateral to secure a loan. If the policyholder dies before the loan is paid off, the lender is prioritized to receive a portion of the death benefit equivalent to the outstanding loan balance. The remaining benefit then goes to the policy's beneficiaries.

• Collateral assignment involves using a life insurance policy as security for a loan , where the lender has a claim on the death benefit if the borrower defaults or passes away before repaying the loan.
• The lender receives priority over the death benefit , which means they are paid first from the policy's payout before any beneficiaries if the loan remains unpaid.
• Various life insurance policies, including term, whole and universal, can be used for collateral assignment , depending on the insurance company's policies and the policy's value.
• If a life insurance policy lapses or is canceled during a collateral assignment, it can breach the loan agreement , potentially resulting in immediate loan repayment demands.
• After the loan is fully repaid, the policyholder must formally release the collateral assignment to restore the policy to its original status and ensure beneficiaries receive the full death benefit.

How Collateral Assignment of Life Insurance Works

The collateral assignment allows you to use your life insurance policy as security for a loan. The process involves legally designating your policy as collateral, which means if you pass away before fully repaying the loan, the lender can claim the death benefit to cover the remaining balance. You start by choosing either a term policy or whole life insurance and then complete a collateral assignment agreement. This agreement is legally binding and sets the terms for the lender to access the death benefit .

For your beneficiaries, this arrangement means the death benefit they receive could be reduced. If you die with an outstanding loan balance, the lender is paid first from the policy's proceeds. Any remaining amount goes to your beneficiaries only after the loan is settled.

For example, a policyholder with a $500,000 policy was assigned as collateral for a $200,000 loan. If the policyholder dies before settling the loan, the lender will receive $200,000 from the policy's death benefit. Meanwhile, the remaining $300,000 gets disbursed to the policy's beneficiaries.

Applying for Collateral Assignment

Applying for collateral assignment is a process moderated by your life insurance company designed to secure loans using your life insurance policy as collateral. It involves a series of steps:

Obtain a Collateral Assignment Form

Request a collateral assignment form from your life insurance provider. This form is crucial for designating the lender as a beneficiary for the loan amount. Ensure you obtain the correct form, as forms vary based on policy type and insurer.

Fill Out the Form Correctly

Complete the form with accurate details, including policy number, loan amount and lender information. Pay close attention to all sections to avoid errors that could delay or invalidate the assignment. Incomplete or incorrect information can lead to processing delays or rejection.

Signed by Both Policyholder and Lender

Ensure both the policyholder and lender sign the form, confirming the agreement. This dual signature legally binds both parties to the terms of the collateral assignment. Any discrepancy in signatures may question the form's validity.

Submit Completed Form

Submit the signed form back to the insurance company for processing. Consider using a traceable delivery method for submission to confirm receipt. Delays in submission can impact the timeline of the loan approval process.

Await Approval or Rejection From Insurance Company

Wait for the insurer to review and approve or reject the collateral assignment. The insurer may request additional information or clarification, which can extend the approval timeline.

Receive a Letter of Acknowledgment

You and your lender will receive a letter of acknowledgment from the insurer if your collateral assignment application is approved.

Obtaining Required Documentation

The required documentation for collateral assignment of life insurance is straightforward. Typically, you'll need to provide two main types of documents:

• Collateral Assignment Form: This form is critical because it officially transfers a portion of your life insurance policy benefits to the lender as collateral. It demonstrates to the lender that you have taken the requisite steps to secure your loan against your life insurance policy.
• Original Life Insurance Policy and Proof of Loan: Lenders may require your original life insurance policy to ensure it is valid and enforceable. Proof of the loan agreement or obligation, such as a mortgage note or other loan document, is also commonly required. This establishes the legitimacy of your loan and substantiates the collateral assignment.

Pros and Cons of Collateral Assignment

Utilizing a life insurance policy for collateral assignment can offer a range of benefits and potential drawbacks. This method allows you to secure loans and is often safer than using physical assets as collateral. However, you should also note the inherent risks, primarily that the lender retains the first right to your policy’s death benefit upon your death.

Impact of Collateral Assignment on Beneficiaries

While the collateral assignment of life insurance has its benefits, it’s important to remember that it can impact the amount your beneficiaries receive. If you pass away with an outstanding balance on your loan:

Your Lender Will Be Paid First

In the collateral assignment arrangement, the lender is designated as the primary beneficiary for the outstanding loan amount. This means if you pass away before fully repaying the loan, the lender is entitled to receive payment from the death benefit first. The amount collected by the lender is limited to the remaining loan balance.

Any Remaining Death Benefit Will Be Disbursed to Your Beneficiaries

After the lender's claim is satisfied, the remaining death benefit is disbursed to your policy’s designated beneficiaries. The amount they receive depends on the loan balance at the time of your death. If the loan balance is substantial, your beneficiaries will receive significantly less than the policy's full death benefit.

Alternatives to Collateral Assignment

Alternatives to collateral assignment include personal loans , home equity loans , or surrendering the life insurance policy for its cash value. None of these options require using life insurance as collateral. Each option offers different benefits and risks compared to using life insurance as collateral.

These questions covers various topics related to collateral assignments, including the requirements, implications for beneficiaries and what happens under various scenarios.

These related sections offer additional insights into concepts and alternatives connected to collateral assignments and life insurance:

Using Collateral for a Personal Loan — This link explains how to use various types of collateral for securing a personal loan, providing a broader context to the specific use of life insurance as collateral.

Term vs. Permanent Life Insurance — This resource compares term and permanent life insurance, helping to understand which types of policies can be used for collateral assignments.

Permanent Life Insurance — This page details permanent life insurance, a type commonly used in collateral assignments due to its cash value component.

Life Insurance Calculator — This page lets you calculate the appropriate amount of life insurance coverage needed, which is crucial when considering using a policy for collateral.

About Nathan Paulus

Nathan Paulus is the Head of Content Marketing at MoneyGeek, with nearly 10 years of experience researching and creating content related to personal finance and financial literacy.

Paulus has a bachelor's degree in English from the University of St. Thomas, Houston. He enjoys helping people from all walks of life build stronger financial foundations.

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Home > Finance > What Is An Assignee On A Life Insurance Policy?

What Is An Assignee On A Life Insurance Policy?

Published: October 14, 2023

Learn the role of an assignee on a life insurance policy and how it can impact your finances. Discover what it takes to become a finance-savvy assignee.

(Many of the links in this article redirect to a specific reviewed product. Your purchase of these products through affiliate links helps to generate commission for LiveWell, at no extra cost. Learn more )

Table of Contents

Introduction, definition of assignee, role of assignee in a life insurance policy, rights and responsibilities of an assignee, process of assigning a life insurance policy, benefits of assigning a life insurance policy, considerations before assigning a life insurance policy, potential challenges and risks for assignees.

Life insurance is a crucial financial tool that provides protection and financial security to individuals and their loved ones in case of unexpected events. While the primary purpose of life insurance is to provide a death benefit to beneficiaries, policy owners also have the flexibility to assign or transfer their policy rights to another person or entity. This is where an assignee comes into play.

An assignee on a life insurance policy refers to the individual or entity who is designated to receive the policy benefits or be the recipient of any policy changes. Assigning a life insurance policy can be a strategic move for policyholders who want to transfer ownership rights or allocate the proceeds to a specific person or organization.

In this article, we will delve deeper into the role of an assignee in a life insurance policy, their rights and responsibilities, as well as the process of assigning a policy. We will also explore the benefits and considerations involved in assigning a life insurance policy, along with potential challenges and risks that assignees may encounter.

Understanding the concept of assignees in life insurance policies is essential for policyholders who may be considering transferring their policy rights or for beneficiaries who need to comprehend the implications of an assigned policy. Without further ado, let’s dive into the details of assignees on a life insurance policy.

An assignee on a life insurance policy is an individual or entity that is designated to receive the policy benefits or take over the ownership rights and responsibilities. When a policyholder assigns their life insurance policy, they transfer their rights to the assignee, who then becomes the new owner of the policy.

The assignee can be a spouse, child, relative, friend, or even a business entity such as a trust or corporation. The assignee can be named at the time the policy is initially taken out, or the policyholder can choose to assign the policy at a later date. In some cases, a policyholder may assign their policy to a lender or creditor as collateral for a loan.

It is important to note that the assignee is distinct from the beneficiary. The beneficiary is the person or entity who receives the death benefit proceeds upon the death of the insured. While the assignee assumes ownership of the policy, they may or may not be the same person as the beneficiary.

Assigning a life insurance policy can be a way for policyholders to ensure that the intended recipient receives the policy benefits or to transfer the financial responsibility and management of the policy to someone else.

Now that we have established the definition of an assignee in a life insurance policy, let’s explore their role in more detail.

The assignee plays a significant role in a life insurance policy once they have been designated as the new owner. Their responsibilities and authority may vary depending on the terms of the policy and the specific agreement between the policyholder and the assignee. Here are some key roles an assignee may have:

• Policy Ownership: As the assignee, they become the legal owner of the life insurance policy. This means they have the rights to manage and make decisions regarding the policy, subject to any limitations or conditions outlined in the assignment agreement.
• Premium Payments: The assignee is generally responsible for paying the premiums to keep the policy in force. They may choose to use their own funds or utilize the policy’s cash value, if available, to cover the premiums.
• Beneficiary Designation: The assignee may have the authority to change the beneficiary designation if permitted by the policy terms. This gives them the ability to redirect the policy’s death benefit to another individual or entity.
• Policy Modifications: Depending on the specific agreement, the assignee may have the power to make changes to the policy, such as increasing or decreasing the coverage amount, adjusting the policy term, or adding additional riders.
• Access to Policy Information: As the new policy owner, the assignee has the right to access and review the policy information, including the policy terms, conditions, and any associated documents.
• Claims Processing: In the event of the insured’s death, the assignee is responsible for initiating the claims process and ensuring that the death benefit proceeds are disbursed to the designated beneficiary.

It’s important to note that the specific roles and authority of the assignee can vary based on the terms of the assignment agreement. It is essential for both the policyholder and the assignee to have a clear understanding of their respective roles and responsibilities to avoid any confusion or disputes in the future.

Now that we have examined the role of an assignee in a life insurance policy, let’s explore the rights and responsibilities they have in more detail.

When an individual or entity becomes the assignee of a life insurance policy, they acquire certain rights and responsibilities associated with the policy. These rights and responsibilities can vary depending on the terms of the assignment agreement and the specific provisions of the policy. Let’s take a closer look at the rights and responsibilities of an assignee:

Rights of an Assignee:

• Ownership Rights: As the assignee, they have the right to the policy benefits and any cash value that has accumulated. They can make decisions regarding the policy, such as changing the beneficiary, modifying coverage, or accessing policy information.
• Premium Payments: The assignee has the right to receive premium payments from the policyholder, which they can use to keep the policy in force. They may also have the right to access the policy’s cash value, if available.
• Policy Modifications: Depending on the terms of the assignment agreement, the assignee may have the right to make changes to the policy, such as adjusting the coverage amount, policy term, or adding additional riders.
• Access to Policy Information: The assignee has the right to access and review the policy information, including the terms, conditions, and any associated documents. This allows them to stay informed about the policy’s provisions and make informed decisions.
• Claims Processing: In the event of the insured’s death, the assignee has the right to initiate the claims process and receive the death benefit proceeds. They are responsible for disbursing the proceeds to the designated beneficiary, if applicable.

Responsibilities of an Assignee:

• Premium Payments: As the assignee, they are responsible for making premium payments to keep the policy in force. This ensures that the policy remains active and the coverage continues.
• Policy Management: The assignee has the responsibility to manage and maintain the policy. This includes reviewing the policy regularly, staying informed about any changes in the terms and conditions, and making decisions that align with the policyholder’s intentions.
• Beneficiary Designation: If authorized by the assignment agreement, the assignee may have the responsibility to change the beneficiary designation if necessary. This involves ensuring that the intended recipient of the death benefit is correctly designated.
• Communication: The assignee has the responsibility to maintain open communication with the policyholder, beneficiaries, and any other parties involved. This helps in addressing any questions, concerns, or changes that may arise regarding the policy.

It’s important for both the assignee and the policyholder to have a clear understanding of these rights and responsibilities to ensure a smooth and effective management of the policy. Now that we have explored the rights and responsibilities of an assignee, let’s move on to understand the process of assigning a life insurance policy.

The process of assigning a life insurance policy involves transferring the ownership rights and control of the policy from the policyholder to the assignee. While the specific steps may vary based on the insurance company and policy terms, the general process typically includes the following:

• Review Policy Terms: The policyholder should carefully review the terms and conditions of their life insurance policy to understand any limitations or restrictions on assigning the policy.
• Choose an Assignee: The policyholder selects an individual or entity to be the assignee. This can be a family member, friend, trust, or even a business entity. It is essential to consider the long-term goals and intentions when choosing an assignee.
• Obtain Consent: The policyholder must obtain the consent of the proposed assignee to ensure they are willing to assume the responsibilities and obligations associated with the policy.
• Prepare Assignment Agreement: The policyholder and the assignee should work together to prepare an assignment agreement. This is a legal document that outlines the terms of the assignment, including the assignee’s rights, responsibilities, and any potential compensation or considerations involved.
• Notify the Insurance Company: The policyholder must contact their insurance company to inform them of the intention to assign the policy. The insurance company may require specific forms to be filled out, along with a copy of the assignment agreement.
• Insurance Company Approval: The insurance company will review the assignment request and the assignment agreement to ensure they comply with their policies and regulations. Once approved, they will update their records to reflect the new assignee.
• Update Beneficiary Designation: If the assignee is different from the original beneficiary, the policyholder may need to update the beneficiary designation to ensure that the intended recipient receives the death benefit.

It is crucial for both the policyholder and the assignee to consult with legal and financial professionals to ensure that the assignment process is conducted properly, adhering to any legal requirements and optimizing the financial outcomes for all parties involved.

Now that we have discussed the process of assigning a life insurance policy, let’s move on to explore the benefits of assigning a life insurance policy.

Assigning a life insurance policy can offer several benefits for both the policyholder and the assignee. Here are some key advantages of assigning a life insurance policy:

• Control and Flexibility: Assigning a life insurance policy allows the policyholder to have control over who will manage and benefit from the policy. It provides flexibility to designate a specific person or entity to take over the ownership rights and responsibilities.
• Estate Planning: Assigning a life insurance policy can be an effective estate planning strategy. It allows the policyholder to transfer assets outside of their estate, which may help in minimizing estate taxes and ensuring a smooth transfer of wealth to the intended recipients.
• Creditor Protection: By assigning a life insurance policy to a trust or business entity, the policy cash value and death benefit may be protected from potential creditors. This provides an added layer of financial security for the assignee and the intended beneficiaries.
• Financial Assistance: Assigning a life insurance policy can be beneficial in scenarios where the assignee needs financial assistance. For example, if the assignee is facing financial hardship or requires funds for a specific purpose, they may be able to access the policy’s cash value or even borrow against the policy.
• Charitable Giving: Assigning a life insurance policy to a charitable organization can be a meaningful way to support a favorite cause. It allows the policyholder to make a significant charitable contribution, and the assignee, in this case, would be responsible for managing the policy and ensuring that the proceeds benefit the designated charity.

It’s important to note that the benefits of assigning a life insurance policy can vary depending on the specific circumstances and goals of the policyholder. Therefore, it is advisable to consult with financial advisors, estate planning professionals, and insurance experts to assess the suitability of assigning a policy and to maximize the potential benefits.

Now that we have explored the benefits of assigning a life insurance policy, let’s move on to discuss some considerations before making the decision to assign a policy.

Before deciding to assign a life insurance policy, it is crucial to carefully consider a few key factors. These considerations will help ensure that the decision aligns with your financial goals and meets your specific needs. Here are some important points to ponder:

• Impact on Beneficiaries: Assigning a life insurance policy may have implications for the intended beneficiaries. It is essential to consider their needs and financial security before assigning the policy to someone else or an entity. Make sure to have open conversations with the beneficiaries to discuss any changes in the policy ownership and how it may impact them.
• Future Financial Needs: Assess your own future financial needs before assigning a life insurance policy. Life circumstances can change, and it is crucial to determine if the policy’s cash value or death benefit might be required for your own financial stability or long-term goals. Balancing immediate financial needs with the desire to assign the policy is important.
• Trustworthiness of the Assignee: Consider the trustworthiness and reliability of the proposed assignee. Assigning a life insurance policy involves transferring ownership rights and responsibilities, so it is crucial to choose someone who will effectively manage the policy and fulfill the agreed-upon obligations. Conduct thorough due diligence and consider seeking legal advice to ensure the assignee is the right choice.
• Tax Implications: Assigning a life insurance policy may have tax implications. Consult with tax professionals to understand any potential tax consequences of the assignment, such as gift tax or estate tax considerations. Proper planning and knowledge of tax laws will help mitigate any unexpected tax liabilities.
• Insurance Company Policy: Review the terms and conditions of your life insurance policy regarding assignments. Some policies may have restrictions or limitations on assigning a policy, and it’s important to understand these provisions. Contact your insurance company directly to clarify any concerns or questions related to the assignment process.
• Legal Considerations: Assigning a life insurance policy involves legal documentation and agreements. It is advisable to consult with legal professionals who specialize in insurance and estate planning to ensure that the assignment is conducted in compliance with applicable laws and meets your specific needs.

Considering these factors will help you make an informed decision about whether assigning a life insurance policy is the right choice for you. Assess your individual situation, speak with professionals, and review your long-term goals to determine if assigning the policy aligns with your overall financial plan.

Now that we have explored the considerations before assigning a life insurance policy, let’s discuss some potential challenges and risks for assignees.

While assigning a life insurance policy can have its benefits, there are also potential challenges and risks that assignees should be aware of. Understanding these risks will help you make informed decisions and take necessary precautions. Here are some potential challenges and risks for assignees:

• Financial Responsibility: As the assignee, you become responsible for paying the policy premiums to keep the coverage in force. Failure to pay the premiums can result in the policy lapsing, causing loss of coverage and potential loss of the policy’s cash value.
• Potential Conflict: Assigning a life insurance policy may lead to conflicts, especially if the policyholder has multiple beneficiaries or if the assigned policy conflicts with other estate planning arrangements. It is important to communicate and coordinate with all involved parties to minimize potential disputes.
• Changing Circumstances: Life circumstances can change, and the assigned policy may no longer align with the assignee’s needs or financial goals. Review the policy periodically to ensure it still meets your objectives. If necessary, consult with professionals to explore options for policy modifications or changes.
• Loss of Control: By assigning a policy, you relinquish control over certain aspects of the policy. The assignee may need to consult the policyholder or beneficiaries before making any changes or important decisions. This loss of control should be carefully considered before proceeding with the assignment.
• Insurance Company Approval: The insurance company typically has the final say in approving the assignment. They will review and confirm the assignment agreement to ensure compliance with their policies. If the assignment is not approved, it can impede the intended transfer of ownership.
• Tax Implications: Assigning a life insurance policy may have tax consequences for the assignee, such as potential income tax on the policy’s cash value or estate tax implications. Consult with tax professionals before finalizing the assignment to fully understand these potential tax implications.

It is crucial for assignees to carefully weigh these challenges and risks against the potential benefits before accepting the assignment of a life insurance policy. Be proactive in communicating with the policyholder and beneficiaries, stay informed about policy details, and seek professional guidance to navigate any potential challenges or risks.

Now that we have discussed the potential challenges and risks for assignees, let’s wrap up our article.

Assigning a life insurance policy can be a strategic financial move that offers flexibility and control over the policy’s ownership and benefits. By designating an assignee, individuals can ensure that the policy proceeds are directed to the intended recipient or utilize the expertise of an entity to manage the policy. However, before proceeding with an assignment, it is important to carefully consider various factors.

Understanding the role, rights, and responsibilities of an assignee is vital to ensure a smooth transition and effective management of the policy. The assignee assumes ownership of the policy, enjoying benefits such as decision-making authority and control over premiums. They also have responsibilities, including making premium payments, managing the policy, and initiating claims if the insured passes away.

The process of assigning a life insurance policy involves reviewing policy terms, choosing an assignee, obtaining consent, preparing an assignment agreement, and notifying the insurance company. It is crucial to review the policy specifics and consult legal and financial professionals to ensure compliance with regulations and optimize financial outcomes.

Assigning a life insurance policy offers numerous benefits, such as control, estate planning opportunities, creditor protection, and financial assistance. However, there are considerations to keep in mind, including the impact on beneficiaries, future financial needs, and tax implications.

Assignees may face potential challenges, such as financial responsibility, conflicts of interest, changing circumstances, loss of control, and insurance company approval. These risks should be carefully assessed, and open communication with the policyholder and beneficiaries is essential to minimize disputes and ensure a smooth transition.

In conclusion, assigning a life insurance policy requires thoughtful deliberation and consultation with professionals. Assessing your financial goals, considering the needs of beneficiaries, and understanding the potential risks will help make an informed decision. Assigning a life insurance policy can provide peace of mind, but careful consideration and planning are essential to ensure the assigned policy aligns with your long-term financial goals.

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Absolute Assignment of Life Insurance Policies

An absolute assignment transfers all ownership rights of a life insurance policy.

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•   1. What Is the Assignment of Insurance Benefits?
•   2. What Is a Life Insurance Assignment?
•   3. Does Life Insurance Count Towards the Two Million for Federal Estate Tax?

An absolute assignment of a life insurance policy involves transferring all rights and ownership decisions to another party. You could have one of several reasons for wanting to do this; for example, using the policy as collateral for a loan, or making a donation to your favorite charity at death. Making an absolute assignment is relatively simple as long as your life insurance policy allows it.

How Transfer of Ownership Works

Absolute assignment is akin to a transfer of ownership, in that you are giving all ownership rights to another party. Although you remain the insured under the contract, the new party can change the beneficiary (usually to itself), it can make decisions about investment options of a whole-life policy, and it can take any other action that does not jeopardize the policy's in-force status. You remain responsible for the premium payments, and you could be in breach of the assignment provisions if you don't pay them.

Collateral Loan Bank Assignment

Absolute assignment of life insurance is often done when a person applies for a loan. If the bank is concerned that the loan might not be repaid if you died, if might require a life policy with an absolute assignment to the bank. The bank names itself the beneficiary of the policy up to the amount of the loan balance. Any residual death benefit would go to your named beneficiary.

Financing a Charitable Gift

Another use of absolute assignment is to make a charitable gift. This approach is gaining in popularity.

Life insurance is often purchased to finance a charitable donation by the estate of a deceased individual. One drawback to this approach is that the entire gift goes through the estate and might incur probate delays and fees.

The use of an absolute assignment streamlines the process, as the charity can name itself the beneficiary of the policy. The charity can issue you a tax receipt for every premium, which you can deduct as a charitable contribution.

Absolute Assignment Legal Considerations

Insurance companies freely provide assignment forms that are straightforward and easy to fill out. Once an assignment is complete, a copy of the form should be filed with the insurance company.

The life insurance company may withhold part of its payout to any beneficiary -- including a newly designated one -- if a premium hasn't been fully paid, or because of other indebtedness. That might have legal ramifications for you and the assignee, in which the insurance company will take no part.

• Standard Life Insurance Co. of New York: Absolute Assignment Form
• Waypoint Partners: Assigning Your Life Insurance Policy
• Collateral Assignment Agreement

Philippe Lanctot started writing for business trade publications in 1990. He has contributed copy for the "Canadian Insurance Journal" and has been the co-author of text for life insurance company marketing guides. He holds a Bachelor of Science in mathematics from the University of Montreal with a minor in English.

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Life Insurance Assignment – What They Are and Why You Need Them

Everything You Need to Know about Absolute vs. Collateral Assignments

Table of Contents

Collateral assignment, how is a collateral assignment used, how to complete a collateral assignment, releasing a collateral assignment, death and collateral assignments, collateral assignments for the uninsurable, absolute assignment, final words.

What is a collateral assignment?

A collateral assignment of life insurance gives lenders the right to collect your policy’s death benefit up to the amount of the outstanding loan balance.

A typical scenario involves taking out a business loan .

The lender may require a life insurance policy as collateral.

The type of life insurance policy used, whether a term, whole life, or universal life doesn’t matter.

The insurance policy will pay off the balance if you die while the loan is outstanding.

Life insurance for SBA loans is required when you borrow from the SBA.

The collateral assignment applies to the entire policy, including any life insurance rider benefits that may be part of the policy.

The process is similar whether you are adding the assignment to an existing policy or are buying new coverage.

There are two parties to a collateral assignment.

• Assignor – Is the owner of the life insurance policy
• Assignee – Is the lender

Life insurance companies have standardized forms used for this purpose.

• The owner completes the form and sends it to the lender for review and signature.
• Once complete, you will send the form to the insurance company.
• The insurance company records the assignment and sends a confirmation to the owner and lender that the assignment is complete.

This may all seem confusing if you haven’t used an assignment before, but the reality is that most life insurers make it pretty easy to complete.

When you pay off your lender, you have the right to have the collateral assignment removed.

The life insurance companies have collateral release forms as well.

• The owner completes the form and sends it to the lender.
• The lender signs off on the release.
• Once complete, the insurance company records the release and sends the discharge letter to all parties.

Once complete, you should re-check with the home office to ensure that your policy released the assignment.

Your agent can help with this.

How do collateral assignments work when you die?

Check out this example:

• Policy Face Amount = $1,000,000
• Beneficiary = Your Spouse
• Original Bank Loan = $200,000
• Outstanding Loan Balance at Death = $100,000

What happens next?

• Your beneficiary will file the death claim with the life insurance company.
• The life insurance company will review the claim and see a collateral assignment attached to your policy.
• The insurer contacts the lender for an updated payoff figure.
• Payoff amounts are sent directly to the lender.
• Your beneficiary receives the balance of the policy death benefit .

For the above example, your lender would receive $100,000, and your beneficiary would receive the remaining $900,000 as intended.

I would like to remind you that you NEVER want to name your lender as the beneficiary, as they would receive the entire proceeds rather than just what was owed.

While lenders may want a life insurance policy as collateral, sometimes it’s difficult to obtain if the insured has substantial health issues .

If you have an existing life insurance policy in effect, it’s possible to use that for the assignment.

Another option that exists in some states is contingent coverage.

Contingent coverage is a one-year policy that you can renew.

The policy will exclude death from the known health issue but provide coverage for new health issues that develop or from accidental deaths .

Many lenders accept this coverage when it’s the only option available.

What is an absolute assignment?

You use absolute assignments when you permanently relinquish all ownership rights to your life insurance policy.

Some examples:

Life Insurance Settlements

With this transaction, you are selling your life insurance policy to a third party.

You may convert a term policy to permanent insurance before it is sold.

Another example may involve admitting seniors to a nursing home.

The nursing home may take over the policy you have.

1035 Exchange

A 1035 exchange is a tax-free transfer of cash value from universal life or whole life policy to another similar policy.

Gifting Life Insurance to Charities

You can use absolute assignments to permanently transfer your policy to your favorite charity.

Irrevocable Life Insurance Trusts (ILIT)

You use absolute assignments to permanently transfer your policy to an ILIT.

An example would be a survivorship policy you and your spouse own that you are transferring to the trust.

Many other potential issues may arise with transfers to an ILIT that are beyond the scope of this article.

Business Cases

If you purchased key person life insurance on an employee, absolute assignments are used to transfer ownership to the employee.

You may have questions about your life insurance assignment and how it works.

The following are general guidelines, as each situation is uniquely different.

Can the collateral assignment change the beneficiary?

No, the collateral assignment does not change the beneficiary.

The life insurance assignment gives the lender the right to receive proceeds equal to their outstanding loan balance.

Can a business be a beneficiary in a collateral assignment of life insurance?

A business can be the beneficiary of a life insurance policy that is collaterally assigned.

Life insurance assignments are common for absolute and collateral assignments.

What is most important is that we understand what is involved with this process.

That’s where we’ll help you make the best decision for your life insurance.

There is never any pressure or obligation with our life insurance service.

Please take a few minutes to submit your quote request today. Thank you.

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Michael Horbal

Collateral Assignment for Life Insurance: A Comprehensive Guide

When you apply for a loan, the lender wants to make sure you have the financial resources to repay your debt. In some cases, the underwriter may ask you to provide a form of collateral. This is typically something of value that you pledge to forfeit to the lender if you default on the loan.

Depending on your circumstances, you may be able to use your life insurance policy as a form of collateral. This could help improve your approval chances for a loan or a mortgage, but there are some important things to understand before utilizing it. Learn how collateral assignment in life insurance works, explore the upsides and downsides of choosing this option, and some alternatives you may want to consider.

Table of Contents

What does it mean to have collateral assignment of life insurance.

Collateral assignment of life insurance allows the lender to be the primary recipient of your life insurance policy’s death benefit if you have an outstanding loan balance when you die. Some assignments also allow the lender to tap into the policy’s cash value if you default on your loan. While using life insurance as collateral does not prevent you from naming your own primary and contingent beneficiaries , it does mean that the lender is paid in full before anyone else. Once the loan balance is covered, your named beneficiaries receive whatever is left.

In some cases, collateral assignment allows the lender to take over your entire policy if you stop making payments on your loan. If you stop paying your policy premiums, the lender may also take over premium payments and add the cost to your principal balance. Collateral assignment can vary depending on the lender and the insurance carrier , so it’s important to carefully read all documents before signing any agreements.

When Is Collateral Assignment Used?

Although life insurance collateral can be used for many types of lending agreements, collateral assignments are commonly used for mortgages and business loans rather than for student loans or credit card debt. They are also not used for unsecured loans, as these types of loans do not require collateral. 

It’s fairly common for a lender to request collateral assignment of whole life insurance and other types of permanent life insurance policies since they have a cash value that’s accessible at any time. This may allow the lender to access the cash value upon your default instead of only having protection when you die.

How Life Insurance Collateral Works

When you take out a loan with an assignment of life insurance, the application process is similar to the process for other types of loans. The main difference lies in the assignment of the insurance policy, which you can do by contacting the insurance carrier and requesting the required paperwork. 

If you and your spouse co-own a life insurance policy, you must both agree to the assignment and be listed as co-assignors. If your spouse does not agree, you cannot use that policy as collateral. It’s also important to note that lenders generally limit the amount of your policy value that you can use for collateral. For example, you may only be able to use 50% to 90% of the policy’s cash value when you collateralize your loan. Each lender and insurance carrier may have different rules, so it’s important to confirm this before completing your application.  

In some cases, you may also need to get permission from the life insurance company to use the policy as collateral. Once the request is approved and the paperwork completed, the lender can move forward with the underwriting process and either approve or deny your loan request.

When you’ve paid off your debt, you can contact your insurance carrier and let them know you need to release the collateral assignee for your life insurance. As long as your loan has been paid, the lender cannot make a claim against your policy, even if you forget to take this step. However, collateral assignments must be settled before funds are distributed to your beneficiaries, so completing this process can help your beneficiaries avoid unnecessary delays.

Term vs. Permanent Life Policies

Lenders generally prefer permanent policies for collateral assignment, but some may accept a term life policy as long as the insurance coverage term lasts at least as long as your loan term. Each lender is different, so you need to confirm the requirements when applying for your loan.

The lender may also prefer a permanent policy because it can provide access to its cash value. Since term policies have no cash value, there’s no recourse for the lender until you die and they’re able to access the policy’s death benefit.

Current vs. New Policies

Some lenders allow you to collaterally assign a life insurance policy you already have in place, while others may require you to take out a new policy. Your ability to use an existing policy also depends on whether the insurance company allows collateral assignment. 

Some insurance companies also do not allow you to complete a collateral assignment during the application process. In this case, you need to finish the process of setting up your policy, then file paperwork to complete the life insurance assignment. Keep this in mind when determining your timeline to complete the required steps. 

Assignees vs. Beneficiaries

When assigning a lender to our policy, you do not name the lender as your beneficiary . Instead, you name the lender as an assignee and designate your beneficiaries in the same way you would with a non-assigned life insurance policy.

If you die before you finish repaying your loan, the lender receives the outstanding loan balance. Your beneficiaries then receive the remainder of the death benefit. If you’ve named multiple beneficiaries, they each receive their designated percentage of the remaining balance.

Should You Consider Using Your Life Insurance as Collateral?

While using your life insurance as collateral may be an option for you, it’s important to carefully consider the pros and cons of doing so. This can help you determine whether it’s a good option for you or if you may want to consider an alternative.

Pros  

If your bank requests a life insurance collateral assignment, you may consider agreeing based on the following advantages: 

• Improved loan approval odds:  Assigning your life insurance policy as collateral may help you get approved for a loan so you can reach your financial goals, such as starting a business or buying a home.
• Asset protection:  When you use a life insurance policy as collateral, you’re not risking other assets, such as your home or retirement account.
• Affordable rates:  Due to the certainty collateral assignment adds to a loan application, lenders may be willing to offer lower interest rates on collateralized loans.
• Tax benefits:  When you use a life insurance policy as collateral, there are no tax implications. This may not be the case if you take out a policy loan or a withdrawal. 

Cons  

While collateral assignment may initially seem like a great idea, there are some potential drawbacks to consider before making your decision:

• Estate planning issues:  If you die before your loan is paid off, the collection of collateral could throw off your estate plan and leave your beneficiaries without the financial security you originally planned to provide.
• Loss of control:  When you use an insurance policy as collateral, you’re required to keep it in place until the loan is paid off. Otherwise, the lender could take out another policy on your behalf and add the premiums to the principal of your loan. 
• Limited access to cash value:  Some forms of collateral assignment may limit your ability to access your policy’s cash value, which reduces your financial flexibility.
• May require a new policy:  Some lenders do not allow borrowers to use existing policies as collateral, and taking out a new policy requires time, effort, and additional expense. 

Alternatives to Collateral Assignment

If you’re not sure that collateral assignment is the right option for you, then you might consider exploring some alternatives. Here are a few options that may help you get the cash you need. 

Utilize a Life Insurance Cash Value Loan  

Rather than assigning your policy to the lender, you could directly tap into your cash value by taking out a life insurance loan. However, to take advantage of this option, you need to have your policy in place long enough to build up sufficient cash value, which can take several years. When you die, your unpaid loan balance and interest charges are also deducted from the death benefit.

Cash Surrender

You may consider giving up your permanent life insurance policy and taking the cash surrender value . Before choosing this option, keep in mind that it requires canceling your policy, potentially leaving you without coverage or in need of a replacement policy. You may also be subject to penalties if your policy is still in the surrender period when you initiate the cancelation.

Take Out a Home Equity Loan

If you’re not comfortable using your life insurance policy as collateral, you may consider taking out a home equity loan instead. This type of loan uses your home as collateral rather than your life insurance policy. This may also be an option if you do not already have a life insurance policy in place or your lender requires you to take out a new policy and you have health issues that prevent you from being approved for life insurance coverage.

Take Out an Unsecured Loan

Unsecured loans are not backed by collateral. This could be an option if you do not want to take the chance of losing your current assets. However, keep in mind that unsecured loans may be harder to get and typically have higher interest rates than collateralized loans.

Take Out a Term Life Insurance Policy  

In some cases, the lender may not require collateral assignment, but borrowers want to ensure their debts are paid upon their death. You can accomplish this by purchasing a term life insurance policy with a term that is equal to your loan term. This allows you to sidestep the collateral assignment process while still providing your heirs with the funds needed to pay off your remaining debt. The beneficiaries can also use any remaining death benefit as they see fit.

As you weigh your options, consider how each alternative fits with your current needs, risk tolerance, and comfort level.

Plan for your family’s future. Get a life insurance quote today.

Assignment of Life Insurance Policy

The person who assigns the policy, i.e. transfers the rights, is called the Assignor and the one to whom the policy has been assigned, i.e. the person to whom the policy rights have been transferred is called the Assignee.

Assignment of a Life Insurance Policy simply means transfer of rights from one person to another. The policyholder can transfer the rights of his insurance policy to another for various reasons and this process is called Assignment.

The person who assigns the policy, i.e. transfers the rights, is called the Assignor and the one to whom the policy has been assigned, i.e. the person to whom the policy rights have been transferred is called the Assignee. Once the rights have been transferred to the Assignee, the rights of the Assignor stands cancelled and the Assignee becomes the owner of the policy.

here are 2 types of Assignment:

• Absolute Assignment – This means complete Transfer of Rights from the Assignor to the Assignee, without any further conditions applicable.
• Conditional Assignment – This means that the Transfer of Rights will happen from the Assignor to the Assignee subject to certain conditions. If the conditions are fulfilled then only the Policy will get transferred from the Assignor to the Assignee.

Let’s take an example:

Rahul owns 2 Life Insurance policies of value Rs 2 lakhs and Rs 5 lakhs respectively. He would like to gift one policy of Rs 2 lakhs to his best friend Ajay. In that case, he would like to absolutely assign the policy in his name such that the death or maturity proceeds are directly paid to him. Thus, after the assignment, Ajay becomes the absolute owner of the policy. If he wishes, he may again transfer it to someone else for any other reason. This type of Assignment is called Absolute Assignment.

Now, Rahul needed to take a loan for Rs 5 lakhs. So, he thought of doing so against the other policy that he owned for Rs 5 lakhs. To take a loan from ABC bank, he needed to conditionally assign the policy to that Bank and then the bank would be able to pay out the loan money to him. If Rahul failed to repay the loan, then the bank would surrender the policy and get their money back.

Once Rahul’s loan is completely repaid, then the policy would again come back to him. In case, Rahul died before completely repaying the loan, then also the bank can surrender the policy to get their money back. This type of Assignment is called Conditional Assignment.

Sachin Telawane is a Content Manager and writes on various aspects of the Insurance industry. His enlightening insights on the insurance industry has guided the readers to make informed decisions in the course of purchasing insurance plans.

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What is Assignment and Nomination in Life Insurance?

‘Assignment’ and ‘Nomination’ are two most common terms used in a life insurance policy document. Let us understand the importance of these two terms in-detail.

By Future Generali. Updated On Oct 06, 2022

Your life insurance policy is a contract between you (insured) and the insurance company (insurer). The contract is filled with jargon. To the extent possible, we must understand all the terms mentioned in the policy bond (certificate). ‘Assignment’ and ‘Nomination’ are two most common terms used in the insurance world.

For instance, in the event that you plan to apply for a home loan, your home loan provider will surely use these terms. Hence, it is best to be sure and understand exactly what the terms mean before you make a decision to buy the policy.

What is assignment in life insurance?

A life insurance policy can be assigned when rights of one person are transferred to another. The rights to your insurance policy can be transferred to someone else for various reasons. The process is known as assignment.

An “assignor” (policyholder) is the person who assigns the insurance policy. An “assignee” is the person to whom the policy rights have been transferred, i.e. the person to whom the policy has been assigned.

In the event rights are transferred from an Assignor to an Assignee, the rights of the policyholder are canceled, and the Assignee becomes the owner of the insurance policy.

People often assign their life insurance policies to banks. A bank becomes the policy owner in this case, while the original policyholder continues to be the life assured whose death may be claimed by either the bank or the policy owner.

Types of Assignment

There are two ways to assign an insurance policy. They are as follows:

1. Absolute Assignment

During this process, the rights of the assignor (policyholder) will be completely transferred to the assignee (person to whom the policy rights have been transferred). It is not subject to any conditions.

As an example, Mr. Rajiv Tripathi owns a Rs 1 Crore life insurance policy. Mr. Tripathi wants to gift his wife this policy. Specifically, he wants to make “absolute assignment” of the policy in his wife's name, so that the death benefit (or maturity proceeds) can be paid directly to her. After the absolute assignment has been made, Mrs. Tripathi will own this policy, and she will be able to transfer it to someone else again.

2. Conditional Assignment

As part of this type of assignment, certain conditions must be met before the transfer of rights occurs from the Assignor to the Assignee. The Policy will only be transferred to the Assignee if all conditions are met.

For instance, a term insurance policy of Rs 50 Lakh is owned by Mr. Dinesh Pujari. Mr. Pujari is applying for a home loan of Rs 50 Lakh. For the loan, the banker asked him to assign the term policy in their name. To acquire a home loan, Mr. Pujari can assign the insurance policy to the home loan company. In the event of Mr. Pujari’s death (during the loan tenure), the bank can collect the death benefit and get their money back from the insurance company.

Mr. Pujari can get back his term insurance policy if he repays the entire amount of his home loan. As soon as the loan is repaid, the policy will be transferred to Mr. Pujari.

In the event that the insurer receives a death benefit that exceeds the outstanding loan balance, the bank will be paid from the difference between the death benefit and the loan and the balance will be paid directly to the nominee. In the above example, the remaining amount (if any) will be paid to Mr. Pujari’s beneficiaries (legal heirs/nominee).

Key Points to know Note About Assignment

In regards to the assignment, the following points should be noted:

• A policy assignment transfers/changes only the ownership, not the risk associated with it. The person assured thus becomes the insured.
• The assignment may lead to cancellation of the nomination in the policy only when it is done in favour of the insurance company due to a policy loan.
• Assignment for all insurance plans except for the pension plan and the Married Women's Property Act (MWP), can be done.
• A policy contract endorsement is required to effect the assignment.

What is nomination in life insurance?

Upon the death of the life assured, the nominee/ beneficiary (generally a close relative) receives the benefits. Policyholders appoint nominees to receive benefits. Under the Insurance Act, 1938, Section 39 governs the nomination process.

Types of Nominees

In a life insurance policy, the policyholder names someone who will receive the benefits in the event of the life assured's death. Here are a few types of nominees:

1. Beneficial Nominees

In accordance with the law, the beneficiary of the claimed benefits will be any immediate family member nominated by the policyholder (like a spouse, children, or parents). Beneficiary nominees are limited to immediate family members of the beneficiary.

2. Minor Nominees

It is common for individuals to name their children as beneficiaries of their life insurance policies. Minor nominees (under the age of 18) are not allowed to handle claim amounts. Hence, the policyholder needs to designate a custodian or appointee. Payments are made to the appointee until the minor reaches the age of 18.

3. Non-family Nominees

Nominees can include distant relatives or even friends as beneficiaries of a life insurance policy.

4. Changing Nominees

It is okay for policyholders to change their nominees as often as they wish, but the latest nominee should take priority over all previous ones.

Key Points to Note About Nomination

In regards to the nomination, the following points should be noted:

• In order to nominate, the policyholder and life assured must be the same.
• In the case of a different policyholder and life assured, the claim benefits will be paid to the policyholder.
• Nominations cannot be changed or modified.
• The policy can have more than one nominee.
• As part of successive nominations, if the life assured appoints person “A” as the first person to receive benefits. Now, in the event of the life assured’s death after person “A” dies, the claim benefits will be given to person “B”. The benefits will be available to Nominee “C” if Nominee “A” and Nominee “B” have passed away.

What is the difference between nomination and assignment?

Let's talk about the differences between assignment and nomination.

Nomination and Assignment serve different purposes. The nomination protects the interests of the insured as well as an insurer in offering claim benefits under the life insurance policy. On the other hand, assignment protects the interests of an assignee in availing the monetary benefits under the policy. The policyholder should be aware of both of them before buying life insurance.

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How to assign a life insurance policy

​What is meant by assigning?

Interest in a life insurance policy can be transferred from the policyholder to a lender or relative by assignment of policy. Here the policyholder is known as the assignor and the person in whose favour the policy has been assigned is called assignee.

​Types of assignment

There are two types of assignment: Conditional assignment: This is done when the insured wishes to pass benefits of the policy to a relative in case of early death or certain conditions. The rights of the policyholder are restored once the conditions are fulfilled. Absolute assignment: This is done as a part of consideration for a loan in favour of the lender/bank/lending institution. In such an assignment, the insured loses his rights in the policy and the absolute assignee can deal with it independently.

​Notice of assignment

The insured needs to either endorse the policy document or make a deed of assignment and register the same with the insurer. A form prescribed by the insurers must be filled and signed. In case of conditional assignment, your reason needs to be mentioned as well.

​Documents required

Proof of income. Self attested copy of photo ID and address proof. Self attested copy of PAN card.

Fees and stamp duty

If the assignment is made by endorsement on the policy document, it is exempt from stamp duty. However, in case of a separate deed, stamp duty is payable.

​Acceptance and the right to reject

If the insurance company decides to register the assignment, it will record it and inform the assignor. On paying a fee, the assignee can obtain an acknowledgement. The insurer also has a right to reject if it believes that the assignment is not bona fide or against the interest of the policyholder or public interest or for the purpose of trading the insurance policy. (Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)

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• Practical Law

Assignment of insurance policies and claims

Practical law uk practice note w-031-6021  (approx. 19 pages), get full access to this document with a free trial.

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Assignment in Insurance Policy | Meaning | Explanation | Types

Table of Contents

• 1 What is Assignment in an Insurance Policy?
• 2 Who can make an assignment?
• 3 What happens to the ownership of the policy upon Assignment?
• 4 Can assignment be changed or cancelled?
• 5 What happens if the assignment dies?
• 6 What is the procedure to make an assignment?
• 7 Is it necessary to Inform the insurer about assignment?
• 8 Can a policy be assigned to a minor person?
• 9 Who pays premium when a policy is assigned?
• 10.1 1. Conditional Assignment
• 10.2 2. Absolute Assignment

What is Assignment in an Insurance Policy?

Assignment means a complete transfer of the ownership of the policy to some other person. Usually assignment is done for the purpose of raising a loan from a bank or a financial institution .

Assignment is governed by Section 38 of the Insurance Act 1938 in India. Assignment can also be done in favour of a close relative when the policyholder wishes to give a gift to that relative. Such an assignment is done for “natural love and affection”. An example, a policyholder may assign his policy to his sister who is handicapped.

Who can make an assignment?

A policyholder who has policy on his own life can assign the policy to another person. However, a person to whom a policy has been assigned can reassign the policy to the policyholder or assign it to any other person. A nominee cannot make an assignment of the policy. Similarly, an assignee cannot make a nomination on the policy which is assigned to him.

What happens to the ownership of the policy upon Assignment?

When a policyholder assign a policy, he loses all control on the policy. It is no longer his property. It is now the assignee’s property whether the policyholder is alive or dead, the assignee alone will get the policy money from the insurance company.

If the assignee dies, then his (assignee’s) legal heirs will be entitled to the policy money.

Can assignment be changed or cancelled?

An assignment cannot be changed or cancelled. The assignee can of course, reassign the policy to the policyholder who assigned it to him. He can also assign the policy to any other person because it is now his property. We can think of a bank reassigning the policy to the policyholder when their loan is repaid.

What happens if the assignment dies?

If the assignee dies, the assignment does not get cancelled. The legal heirs of the assignee become entitled to the policy money. Assignment is a legal transfer of all the interests the policyholder has in the policy to the assignee.

What is the procedure to make an assignment?

Assignment can be made only after issue of the policy bond. The policyholder can either write out the wording on the policy bond (endorsement) or write it on a separate paper and get it stamped. (Stamp value is the same, as the stamp required for the policy — Twenty paise per one thousand sum assured). When assignment is made by an endorsement on the policy bond, there is no need for stamp because the policy is already stamped.

Is it necessary to Inform the insurer about assignment?

Yes, it is necessary to give information about assignment to the insurance company. The insurer will register the assignment in its records and from then on recognize the assignee as the owner of the policy. If someone has made more than one assignment, then the date of the notice will decide which assignment has priority. In the case of reassignment also, notice is necessary.

Can a policy be assigned to a minor person?

Assignment can be made in favour of a minor person. But it would be advisable to appoint a guardian to receive the policy money if it becomes due during the minority of the assignee.

Who pays premium when a policy is assigned?

When a policy is assigned normally, the assignee should pay the premium, because the policy is now his property. In practice, however, premium is paid by the assignor (policyholder) himself. When a bank gives a loan and takes the assignment of a policy a security, it will ask the assignor himself to pay the premium and keep it in force. In the case of an assignment as a gift, the assignor would like to pay the premium because he has gifted the policy.

Types of assignment

Assignment may take two forms:

• Conditional Assignment.
• Absolute Assignment.

1. Conditional Assignment

It would be useful where the policyholder desires the benefit of the policy to go to a near relative in the event of his earlier death. It is usually effected for consideration of natural love and affection. It generally provides for the right to revert the policyholder in the event of the assignee predeceasing the policyholder or the policyholder surviving to the date of maturity.

2. Absolute Assignment

This assignment is generally made for valuable consideration. It has the effect of passing the title in the policy absolutely to the assignee and the policyholder in no way retains any interest in the policy. The absolute assignee can deal with the policy in any manner he likes and may assign or transfer his interest to another person.

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What is ‘Assignment’ of Life Insurance Policy?

Insurance is a contract between the insurance company (insurer) and you (policyholder) . It is a contract with full of jargon. As much as possible, we must try to understand all the insurance terms mentioned in the policy bond (certificate) . One such insurance jargon which is mostly used is Assignment .

If you are planning to apply for a home loan, your home loan provider may surely use this term. So, what is Assignment? Why assignment of a life insurance policy is required? What are different types of assignment? What are the differences between Assignment & Nomination?

What is Assignment?

Assignment of a life insurance policy means transfer of rights from one person to another. You can transfer the rights on your insurance policy to another person / entity for various reasons. This process is referred to as ‘ Assignment ’.

The person who assigns the insurance policy is called the Assignor (policyholder) and the one to whom the policy has been assigned, i.e. the person to whom the policy rights have been transferred is called the  Assignee .

Once the rights have been transferred from the Assignor to the Assignee, the rights of the policyholder stands cancelled and the assignee becomes the owner of the insurance policy.

Assigning one’s life insurance policy to a bank is fairly common. In this case, the bank becomes the policy owner whereas the original policyholder continues to be the life assured on whose death the bank or the policy owner is entitled to receive the insurance money.

Types of Assignment

The assignment of an insurance  policy can be made in two ways;

• Example : Mr. PK Khan owns a life insurance policy of Rs 1 Crore. He would like to gift this policy to his wife. He wants to make ‘absolute assignment’ of this policy in his wife’s name, so that the death benefit (or) maturity proceeds can be directly paid to her. Once the absolute assignment is made, Mrs. Khan will be the owner of the policy and she may again transfer this policy to someone else.
• Example : Mr. Mallya owns a term insurance policy of Rs 50 Lakh. He wants to apply for a home loan of Rs 50 Lakh. His banker has asked him to assign the term policy in their name to get the loan. Mallya can conditionally assign the policy to the home loan provider to acquire a home loan. If Mallya meets an untimely death ( during the loan tenure) , the banker can receive the death benefit under this policy and get their money back from the insurance company.

• In case if the death benefit received by the banker is more than the outstanding loan amount, the insurer will pay the bank the outstanding dues and pay the balance to the nominee directly. The balance amount (if any) will be paid to Mallya’s beneficiaries ( legal heirs / nominee) .

How to assign a life insurance policy?

The Assignment must be in writing and a notice to that effect must be given to the insurer. Assignment of a life insurance policy may be made by making an endorsement to that effect in the policy document (or) by executing a separate ‘ Assignment Deed ’.  In case of assignment deed, stamp duty has to be paid. An Assignment should be signed by the assignor and attested by at least one witness.

Download absolute assignment deed sample format / conditional assignment deed format.

Nomination Vs Assignment

Nomination is a right given to the policyholder to appoint a person(s) to receive the death benefit (death claim) . The person in whose favor the nomination is effected is termed as ‘nominee’. The nominee comes into picture only after the death of the life assured (policy holder) . The nominee will not have the absolute right over the money (claim proceeds) . The other legal heirs of the policy holder can also recover money from the nominee.

(However, as per Insurance Laws (Amendment) Act, 2015 – If an immediate family member such as spouse / parent / child is made as the nominee, then the death benefit will be paid to that person and other legal heirs will not have a claim on the money)

Under nomination, the rights of the policyholder are not transferred. But, assignment is transfer of rights, interest and title of the policy to some other person (or) entity. To make assignment, consent of the insurer is also required.

Important Points

• Assignment of policies can be done even when a loan is not required or for some special purposes.
• If you assign the policy for other purpose other than taking a loan, the nomination stands cancelled.
• If the policy is assigned, then the assignee will receive the policy benefit. Death benefit will be paid to the Nominee, in case the policy is not assigned.
• The policy would be reassigned to you on the repayment of the loan (under conditional assignment) .
• Types of insurance policies used for assignment purpose to get business loans, generally include an endowment plan, money back policy or a ULIP. Home loan providers generally ask for the assignment of Term insurance plans on their names. (The term plan tenure should be more than the home loan tenure)
• An assignment of a life insurance policy once validly executed, cannot be cancelled or rendered in effectual by the assignor. The only way to cancel such assignment would be to get it re-assigned by the assignee in favor of the assignor.
• You can also raise a loan against your policy from your insurance company itself. In this case, your policy would have to be assigned to insurance company.
• An insurer may accept the assignment or decline. (The insurer shall, before refusing to act upon the endorsement, record in writing the reasons for such refusal and communicate the same to the policy-holder not later than thirty days from the date of the policy-holder giving notice of such transfer or assignment)
• In case of death of the absolute Assignee (to whom the policy rights have been transferred under absolute assignment) , the rights under the policy will be transferred to the legal heirs of the assignee.
• You can also assign a life insurance policy under Married Women’s Property Act . (At the time of making the application (buying a policy), a separate MWPA form has to be filled by the proposer for it to be covered under MWP Act. Do note that the existing life insurance policies cannot be assigned under MWP Act)
• Partial assignment or transfer of a policy can also be made. But banks will accept any of your life insurance policies as long as the sum assured is equal to or greater than the loan amount.

Hope you find this post informative and do share your comments.

(Image courtesy of Stuart Miles at FreeDigitalPhotos.net)

About The Author

Sreekanth Reddy

Can a LIC policy be assigned to someone not related by blood??

Dear Chowdhury, Yes, it is possible. However, Assignment is not permitted on all life insurance policies issued under How to buy Term Life Insurance under Married Women’s Property Act?

Very useful and gathered more knowledge

Hi, I got a question in CFP EXAM 5( case study paper) with regard to assignment of money back policy to a minor. I would like to know can a conditional assignment be made to a minor and if yes what about the premium that is yet to be paid? and would a guardian need to be appointed till the minor attains majority? and is it possible that an absolute assignment can be made?

Dear Dhaarini,

Where an assignment is made in favour of minor, the policy can not be dealt with during the minority of the assignee, even with consent of natural guardian or appointed guardian. This means minor assignee cannot raise loan, surrender or further assign the policy during his/her minority.

If the assignment is in favour of a minor, in the event of claim, policy money cannot be paid to him, as he cannot give valid discharge. It is therefore desirable that where the assignee is minor, testamentary guardian should be appointed in respect of all the properties of such minor including the policy moneys. The father i.e. natural guardian of the minor can only appoint the testamentary guardian. The appointment can be done by a separate instrument or on the back of the policy.

What if a wife has taken a policy in the name of his husband and put the nominee herself and also pays all the premiums herself, and now they are taking divorce. So, now can husband assign the policy to her and what benefits she can receive after assignment. Can she withdraw tha amount of the policy??

Dear Monika, Yes, he can make an Absolute assignment in the name of Wife..

Under Life Assurance one can assign a policy only if that policy is a policy of his/her own life. Here wife has taken a policy on her husband life and hence assignment does not arise. In the event of death of her husband she receives the death benefit irrespective of her relationship at the time of death. This is because under Life Assurance the Insurable Interest is required at the proposal stage and needs not be present at the claim stage.

I wanna give my policy to new owner

A assigned his policy to his brother B and B is paying premiums. A’s nominee is his father. What will happen if B dies?

Dear Mr Naidu, May I know what type of Assignment is this??

A assigned his policy to his brother B, out of love and affection as absolute assignment. Whose life is covered?. What happens if B dies?

Dear Mr Naidu, If the assignee (Mr B) dies, then his/her legal heirs will be entitled to the policy money. Kindly note that an assignee cannot make a nomination on the policy which is assigned to him.

“Absolute assignment is generally made for valuable consideration e.g. raising of loan from an individual / institution. This assignment has the effect of passing the title in the policy absolutely to the assignee and the policyholder in no way retains any interest in the policy. The absolute assignee can deal with the policy in any manner he likes and may even transfer his interest to another person or surrender the policy. Under absolute assignment when the assignee (Mr B) dies the benefits go to the legal heirs of the assignee and not to the heirs of the life assured.”

What is the procedure to get the policy assigned? How much time does it take?

Thanks for this. I always like to use study materials by Indians in preparing for my professional exams. The contents here are superb and easy to understand.

Once assignment is done, on whose name Renewal receipts and PPC will be generated.

Dear Gayu ..in the name of Policyholder only.

My colleagues were looking for USPS PS 1000 this month and were informed of an online platform that hosts a ton of fillable forms . If people are wanting USPS PS 1000 too , here’s https://goo.gl/Qqo6in .

Dear Sreekanth, I am having an LIC policy for the past 10 year. now i would like to assign the same to my mother. Now after the assignment, whose life is covered and who gets all the benefit? Do i have to appoint a new nominee after the assignment?

Dear Bhavik ..Life cover will be in your name only. Your mother can get the benefits. You can make her as the nominee.

If policy assigned to absolute assignment from A to B. B is the assignee of the policy and he have all rights of the policy. After assignment who will have a life cover A or B. Who will get the death benefits

Dear Senthil, Life cover – A. Beneficiary – B.

Thanks for this information, Let me know who will pay the remaining premium after assignment.and what are the other reasons for assignment except loan and gift. Manish

Dear Manish ..The policy holder only has to pay the premium.

I have a ULIP assigned to my home loan. I have paid two annual premiums till now. If I dont pay the next premium, will it have any impact on my home loan ? I know that my ulip will get discontinued in this case but can the bank force me to pay the premium legally ?

Dear Kalis, If sum assured falls below the outstanding loan amount then you banker may ask you to assign another policy or pay the premiums on this one.

Thanks. Sum assured is already below the loan amount. In this case, can bank take any legal action against me if I don’t pay the premium?

Dear Kalis..Why do you want to take this risk?

Who will have to pay tax if single premium ULIP where premium is >20% of sum assured is assgned to spouse & she then sureender it.

Dear Vishal ..The insured (policyholder)..

my father aged 72 has taken a ULIP policy on my Child with coverage 10 lakhs .But now he would like to Assign the policy to my mother’s Name aged 67.

Please Clarify weather the life coverage and policy benefits will be transferred to my Mother or will it continue with my son.

Dear Nisha, May I know who is the ‘insured’ in this policy? Is the child just a nominee to the policy? “If he assigns the policy for other purpose other than taking a loan, the nomination stands cancelled. If the policy is assigned, then the assignee will receive the policy benefit. “

Hi.. Really nice blog.very informative and useful. I liked the way You explained very briefly about Assignment’ of Life Insurance Policy.

Hi Srikanth,

Nice article on Assignment!

I Just wanted to know If i nominate my spouse for the life insurance or nominate my child and appoint my spouse how these to things are different in terms claim settlement of life insurance.

Ideally I may want my spouse to look-after my child education until they turn major and they do not misuse the claim amount.

Please let me know if possible your contact number so that we discuss further..

Please suggest.

Thanks, Shravan

Dear Shravan, If you are planning to buy a new Term plan, you can assign the policy under MWP Act by mentioning the Percentages (share in death benefits) among your legal heirs (spouse & kids). You also have the option to write a WILL and give detailed instructions about how the claim amount (if any, on such policy) should be used or allocated.

Dear Sreekant, Thanks for such valuable information. Please do correction on your post that the existing life insurance policies cannot be assigned under MWP Act. Pl correct me if I am wrong. Please let me know that even if I assign the policy unconditionally to the bank for home loan purpose, after repaying the home loan successfully, the bank should re-assign the policy to me. If it does not do this, what options do I have? Thanks again.

Dear Vivek, Yes, only new insurance policies can be assigned (while purchasing new ones) under MWP. I should have written the sentence as ‘You can also assign a new life insurance policy under….’ Thank you for pointing this out. (I have provided all the details about MWP act in another article).

If a policy is assigned with absolute assignment, it cannot be cancelled. It can be done only by another valid re-assignment. So, the banker has to re-assign it after the repayment of loan. When you do not wish to give away your complete control over policy, do not go in for absolute assignment.

thanks for prompt response.

ReLakhs.com is a blog on personal finances. The main aim of this blog is to help you make INFORMED financial decisions by presenting the content on money matters in a simple, unbiased and easy to understand manner.

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How to collect a life insurance payout

Affiliate links for the products on this page are from partners that compensate us (see our advertiser disclosure with our list of partners for more details). However, our opinions are our own. See how we rate insurance products to write unbiased product reviews.

• Collecting a life insurance payout after a loved one dies is a fairly straightforward process.
• Start by gathering your loved one's life insurance documents, preferably before their death.
• Next, notify the insurer and carefully fill out and submit your claims documents.

Losing a family member can be really hard. Late last year, my father died from prostate cancer, leaving a big hole in our hearts. But he did one very good thing for my mom decades before finding out he had cancer. He signed up for three life insurance policies that added up to a significant payout.

While I've written dozens of articles about life insurance and know the processes well, this was my first time actually going through the steps of collecting life insurance. I learned a few new tips to make the process easier while doing it myself. 

Here's what everyone should know about collecting life insurance when someone dies.

Keep close track of life insurance policies

If all goes well, everyone in your family will live a long, healthy life and your relative will outlive any term life insurance policies they may have. I was lucky to have three years' notice to help my mom get her finances in order before my dad died, and that included getting life insurance policies organized.

Because unfortunate and unexpected accidents and illnesses happen, it's important to have an open conversation with your family about life insurance. Few people like to talk about their demise, but you can't collect life insurance payments when you don't know about the policies.

Common life insurance policies include:

• Term life insurance
• Whole or universal life insurance
• Group life insurance

When organizing your family's insurance files, make sure to include policies that were bought individually or through an employer benefit plan. Periodically update your records, so you and your family have quick access to any insurance documents in the event of a worst-case scenario.

Notify the insurer of the death

Some financially savvy people may be able to skip to the next step, but my mom and I found it easiest to call each life insurance company to notify them of the death and ask what forms were needed. That way, we didn't have to guess and risk filling out the wrong form or missing something important.

In all three cases, the insurance companies were friendly and helpful. They were able to email me copies of the claim forms that we could fill out on the computer or by hand. Each insurer has different rules about death certificates — some want notarized originals, while others take photocopies or scans.

List out what your insurer requires and get to work filling out your claim forms.

Complete claim forms and pick a payment method

The bulk of the information required on each claim form was simple and straightforward. We needed my parents' contact information, my dad's Social Security number, and basic information about his death. There were no tricks or hoops to jump through, though the long forms were a bit tedious to complete.

One of the most important areas on each claim form asked about how my mom wanted to be paid, as she was the listed beneficiary on each policy. She opted for a direct deposit where it was available, as it's a secure way to get paid as quickly as possible. Direct deposit is much more secure than the mail, where checks may be lost or stolen.

Before my dad's death, we opened a new online checking account and investment account in my mom's name. We used her new checking account for the payments.

Submit claim forms and death certificates

Once you've dotted your i's and crossed your t's, you can send in your claim form and any required supporting documents. We asked for eight copies of my dad's death certificate just in case we needed extras. Two of the three life insurers wanted original copies, while the third was happy with a scanned copy submitted via email.

Closely follow any directions on the claim form to ensure your payment is sent out as quickly as possible. If you forget anything, it can add weeks while they ask for missing documents, you send them in, and they take time to process and review everything again.

Follow up if necessary

Hopefully, you'll see the money show up in your account within a few weeks. If it takes more than two or three weeks, you should consider reaching out to the insurer to ensure your forms have been received and nothing is missing.

If you don't have life insurance already, it can be a big gift to your dependents if you're no longer around. The money my mom received didn't change her life, but it should be enough, combined with other savings and Social Security, to comfortably maintain her standard of living indefinitely. That, after all, is what life insurance is all about.

Editorial Note: Any opinions, analyses, reviews, or recommendations expressed in this article are the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any card issuer. Read our editorial standards .

Please note: While the offers mentioned above are accurate at the time of publication, they're subject to change at any time and may have changed, or may no longer be available.

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Life insurance rates by age

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On This Page

How does my age affect my life insurance premium?

How life insurance rates are determined, frequently asked questions.

Age plays a pivotal role in determining life insurance premiums. Similar to other insurance products, life insurance rates reflect the likelihood of a payout. As we journey through life, the odds of passing away increase, elevating the risk to insurers. This means that as applicants get older, policy costs increase due to the heightened chance of a death benefit claim. While health status, medical history and lifestyle choices also sway pricing, age remains a primary factor that can greatly inflate quotes over time. Bankrate’s team of insurance experts took time to break down how rates correlate to age so that you can know what to expect in your search for a policy.

Compare life insurance providers quickly and easily

See which provider is right for you.

Whole life insurance combines life insurance with an investment component.

• Coverage for life
• Tax-deferred savings benefit if premiums are paid
• 3 variations of permanent insurance: whole life, universal life and variable life include investment component

Term life insurance is precisely what the name implies: an insurance policy that is good for a specific term of time.

• Fixed premium over term
• No savings benefits
• Outliving policy or policy cancellation results in no money back

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Age remains one of the most influential factors affecting life insurance premiums. Insurers assess premiums based on multiple personal rating factors, but an emphasis is placed on mortality risk, and the probability of death rises steadily as we get older.

For example, a 20 year old generally presents lower risk and will generally pay less for coverage than a 50 year old, who has a higher statistical likelihood of passing away sooner. When you are shopping for life insurance, it may be important to consider your age and how it will affect your premium. Depending on your age, you might decide to choose one life insurance policy type over another in order to get a more affordable rate. Here is a brief overview of life insurance rates by age.

Young adult life insurance

Young adults are often in good health and may only need a small amount of coverage, which might translate to lower rates. Many individuals will find that a term life insurance policy offers adequate coverage for their needs and budget.

For example, a 35-year-old couple with a five-year-old child might consider purchasing term life insurance policies with $500,000 in coverage over a 30-year term. This may help provide a financial cushion for the surviving spouse and child if one policyholder passes away. The death benefit could be used to help pay the mortgage, replace the lost spouse’s income and cover the child’s educational expenses. In most cases, life insurance policies for young adults are based on what fits your budget and covers immediate outstanding financial concerns, such as debts and loans.

Middle-age life insurance

People between ages 40 and 60 may benefit from a permanent life insurance policy that offers protection for their lifetime (as long as premiums are paid). Life insurance for middle-aged policyholders may be geared toward helping a spouse pay down the remaining amount on a mortgage and pay off other debts. Life insurance may also be used to leave a financial gift to a spouse or loved one without necessarily earmarking the money for a certain use.

Permanent life insurance will typically have a higher premium than term life insurance policies since the payout is likely guaranteed. This is not necessarily a negative factor if you have the finances to afford the higher premium. Knowing that you have a permanent life insurance policy in place may offer the peace of mind that your beneficiaries will be taken care of in the event that you pass away.

Life insurance for seniors

Life insurance for seniors can be a bit trickier than for other age groups. Most insurance companies will not sell new life insurance policies to people over a certain age, with the cutoff typically between ages 70 and 80. For people who are older or suffer from pre-existing health conditions, a guaranteed life insurance policy may be the best or only option. This type of policy does not have a medical exam, and coverage is guaranteed. However, these policies can be expensive and usually have a death benefit cap around $25,000.

Life insurance rates typically increase as you get older. However, insurance companies also look at other important factors like your overall health, family medical history, occupation, lifestyle, gender, tobacco use and the type of policy you buy and the amount of coverage you need in order to calculate your personalized rate. If you are considering buying life insurance, it may be a good idea to consult a licensed life insurance agent or financial advisor on what type of policy makes sense for your age, budget and coverage needs.

Life insurance companies use a few different criteria to calculate your premium. Some of the most significant ones include your age, overall health, gender, the type of life insurance policy you need and the amount of coverage you choose. You may be able to build a more robust life insurance policy with riders . These add-ons may help you customize your policy and make your coverage more comprehensive, but they will also likely increase your premium. We provide a deeper look into some of these risk factors that insurance companies analyze and how they may impact your life insurance premium below.

Young people tend to pay the lowest life insurance rates whereas older people tend to pay the highest. Although there are exceptions — usually based on the health of the applicant — a 30 year old will likely receive a lower premium quote than a 40 year old. Life insurance rates usually increase as you get older because advanced age typically corresponds to health complications or a shorter lifespan. This means insurance companies can generally expect a claim payout will come sooner for an older person and will often charge a higher premium to offset that risk.

The table below showcases average monthly life insurance rates by age — particularly highlighting how age influences monthly premiums for 10-year term life insurance policies at different coverage amounts. These sample rates apply to healthy non-smokers with no special risk factors.

As shown, premiums incrementally increase with age across all policy sizes. A 30 year old pays nearly a fourth of the cost of a 50 year old for identical coverage.

Source: Aflac

For whole life insurance rates by age, the following table shows how rates fluctuate for a whole life policy at different coverage amounts. Notice that the 35-year-old female pays nearly half the cost of a 60-year-old female. 35-year-old males can expect to see rates more than double by age 60.

Source: Choice Mutual

Keep in mind that these charts are only an example, rates will vary depending on policy type, length, coverage amount and company.

Health is another major factor that contributes to the cost of life insurance. People who suffer from pre-existing medical conditions — like diabetes, heart disease or obesity — may not live as long as healthy people with few or no medical conditions. As a result, insurance companies may charge higher rates for people with health issues or a family history of disease.

In most cases, in addition to a traditional medical exam or health questionnaire, insurance companies use rating tiers to determine your health risks. Each rating category is defined as follows:

• Preferred Plus: People in the Preferred Plus category are in excellent health, with no family history of disease or pre-existing conditions.
• Preferred: Those in the Preferred category are typically in great health, but they might have a family history of one or two illnesses.
• Standard Plus: The Standard Plus category means the individuals are mostly healthy, but may be slightly overweight, or suffer from minor conditions without a long family history of disease.
• Standard: People in the Standard category suffer from moderate health issues and have a strong family history of disease.
• Substandard: This category is for applications with moderate to severe medical issues or risky health habits, like smoking.

Insurance companies may use different categories depending on their own regulations.

It may come as a surprise to learn that your gender also plays a key role in your life insurance premium. Men typically pay more for life insurance than women. This is because actuarial data shows that women have a longer lifespan than men, meaning companies may pay out a life insurance benefit earlier for men than for women. According to data from the U.S. Census , the projected average life expectancy for a female in 2020 was 81.9 years old, and for men, the projected average was 77.1 years old.

Job and lifestyle

Your job and lifestyle are also factors that are considered by a company when determining your premium. Applicants who engage in low-risk activities often pay less than those who regularly participate in high-risk roles. For example, an office worker may receive lower premiums than a construction worker. Insurers view certain professions as more accident-prone and hazardous. Maintaining good health can help offset higher premiums in high-risk occupations. Discuss your job duties with a life insurance agent to determine if you qualify for standard rates or may pay more due to elevated mortality risk. Leading a safety-conscious lifestyle can potentially reduce costs regardless of your career.

Similarly, the hobbies you choose may also impact your life insurance rates. High-risk hobbies like skydiving , rock climbing, motorcycle racing and scuba diving may drive up your insurance premiums.

Policy type

Life insurance premiums are largely dependent on the kind of policy you buy. Term life insurance is typically  the most affordable policy type because it only offers coverage for a limited number of years. If you do not pass away during the term or convert or extend the policy , the policy expires without a death benefit being paid out. On the other hand, permanent life insurance policies are generally more expensive because they are intended to provide coverage for your entire lifetime.

If you purchase a guaranteed life insurance policy, you could end up paying the highest rate. Guaranteed life insurance policies do not require a medical exam , so to make up for the added risk of insuring older or health-compromised individuals, insurance companies usually charge expensive premiums in comparison to other forms of life insurance. Despite the high rates, guaranteed life insurance policies usually have very low policy limits, as they are generally designed to cover end-of-life expenses.

Coverage limit

The last factor that determines your life insurance premium is your policy’s coverage limit. The more life insurance you need, the more expensive your insurance premium will usually be. When you pass away, your insurance company agrees to pay your beneficiaries a certain amount of money. Higher limits present a greater financial risk to the company, and that means a higher premium to compensate.

For example, someone who has a coverage limit of $100,000 will likely have a much lower premium than someone with $1 million in coverage. Ultimately, it will cost the insurance company less money to pay out $100,000 than it would to pay out $1 million, so the average cost of premiums would be much lower.

What is the best age to purchase life insurance?

The best time to buy life insurance if you want affordable coverage is typically before age 30, but will vary based on an individual's health, budget and reason for purchasing life insurance. Although you may not have children or a mortgage at a younger age, younger aged applicants tend to be the least expensive to insure. On the other hand, you may not necessarily be able to afford life insurance when you're young. In this case, the best time to consider life insurance might be after a significant life event, like getting married, buying a home or having a child. If you think you will want to purchase life insurance eventually, it may be beneficial to speak with a licensed insurance agent or financial professional on when the best time to buy life insurance may be for you based on your circumstances and financial goals.

What company has the best life insurance policies?

There is no single best life insurance company for everyone. While life insurance rates are more dependent on application age and health than auto or home insurance rates , the unique needs of each policyholder and the ability of any given company to meet those needs is also an important factor that shouldn’t be overlooked. For example, if you’re looking for a specific rider, you’d narrow your search to companies that offer that coverage option.

Understanding your needs and researching various companies may help you find the right option. When in doubt, you can also work with a licensed life insurance agent for more guidance.

How can I find cheaper life insurance?

One of the best ways to find the cheapest life insurance company for you may be to understand your coverage needs. While shopping around might help you save a bit of money, remember that life insurance rates don’t vary as much between companies as home or auto insurance rates . Additionally, discounts are not available for life insurance. Working with an agent to determine the best type of policy, level of coverage and riders for your situation may help you find a policy that fits your needs and budget.

How much life insurance do I need?

Deciding how much life insurance coverage to purchase can seem daunting, but there’s helpful strategies you can use. When determining how much life insurance you need , assess a few relevant variables. These may include the amount of debt you have, how much you contribute to household income and financial goals for your children (like saving for college). From here, it may help to follow a guide or use a calculator to determine how much financial protection you might need in the face of these variables.

Does having COVID-19 impact eligibility for purchasing a life insurance policy?

During the application process, most life insurer health questionnaires will include a few COVID-19 questions. Previously having COVID should not impact your ability to purchase new life insurance coverage, according to the Insurance Information Institute. However, if you are experiencing long COVID symptoms, that may be considered a chronic condition and could impact the rate you are charged.

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4 common policy types plus key insurance planning tips for families.

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Portrait of a young family in front of farmhouse

Insurance provides a financial safety net for life’s challenges, ensuring peace of mind in times of uncertainty. To celebrate the International Day of Families, explore ways to safeguard your family’s future and create a lasting legacy of love and support with these insurance planning insights.

Common Types Of Insurance For Families

Life insurance.

This provides financial compensation to beneficiaries upon the policyholder’s death. Life insurance safeguards your family’s financial future by ensuring support for your dependents after your death. Several types cater to different needs and financial goals.

For example, term life insurance offers coverage for a specific period, like 10, 20, or 30 years. It is generally more affordable and is ideal for temporary needs such as raising children or paying off a mortgage. However, it does not build cash value and expires if you outlive the policy.

Whole life insurance, on the other hand, covers you for your entire life and includes a savings or investment component. This type is more costly but provides lasting security and financial flexibility.

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Another type is universal life insurance, which allows you to adjust premiums and benefits, combining permanent coverage with a savings element that grows based on interest rates. This flexibility can be crucial as your financial circumstances evolve.

Health Insurance

The right health insurance plan can significantly improve your access to necessary medical services and how you manage out-of-pocket costs. You can choose between individual and family plans depending on your healthcare needs.

Family plans are typically more comprehensive and cost-effective if multiple family members require regular medical attention. When selecting a plan type, you have options like Health Management Organizations (HMOs), which require choosing a primary care physician and getting referrals for specialists, or Preferred Provider Organizations (PPOs), which offer more flexibility in choosing providers but often come at a higher cost.

Understanding deductibles, copayments, and coinsurance is crucial as these determine how much you pay out of pocket for healthcare services before your insurance covers the costs. Lower premiums can mean higher deductibles and copays, so finding a balance that fits your financial situation is important.

Equally essential is preventative care, which includes routine check-ups, vaccinations, and screenings. These services can help you avoid more severe health issues down the line and are often covered without additional out-of-pocket costs under many health plans.

Selecting the optimal health insurance involves comparing these elements alongside the specific health needs of your family, ensuring that everyone’s health is safeguarded without straining your finances.

Disability Insurance

This insurance protects your income if you cannot work due to illness or injury. There are two main types based on the length of coverage: short-term disability insurance covers you for a few months, providing immediate financial relief after an incident, while long-term disability insurance offers coverage for an extended period, possibly until retirement.

When choosing disability insurance, it’s important to understand the coverage amounts and the elimination period—the time between the onset of a disability and when benefit payments begin. For example, a longer elimination period generally results in lower premiums but requires that you have sufficient savings to cover expenses until the benefits are paid out.

You should also note that policies vary in their definitions of disability. Some cover the inability to perform your specific job duties, while others only pay out if you are incapable of working at all. Consider your individual needs and risk exposure when selecting a policy.

Property Insurance

This protects your family’s physical assets. A common example is homeowners insurance, which safeguards your home and belongings against damage from fires, storms, burglaries, and other incidents. It typically includes liability coverage, which protects you against legal claims if someone is injured on your property.

Another example is auto insurance, which is mandatory in many areas and protects you from financial losses resulting from car accidents. It can cover repairs to your vehicle, responsibility for damage to others, and, optionally, medical expenses for injuries.

For all types of property insurance, it’s important to understand what your policy covers and what it excludes. Knowing your coverage limits and any applicable deductibles is also key, as these factors significantly affect your out-of-pocket costs after an incident.

How To Determine Coverage Needs

Identify potential risks.

These risks can vary widely but typically include scenarios such as premature death, illness or disability, significant property damage, or potential liability claims. Each of these events can have a profound impact on your family’s financial well-being.

For instance, the unexpected death of a breadwinner could leave your family struggling to meet everyday expenses, let alone future financial goals. Similarly, a severe illness or disability can lead to high medical costs and lost income, while substantial property damage or liability claims can drain your financial resources.

Understanding these risks is fundamental to crafting an insurance strategy that addresses your specific vulnerabilities.

Assess Financial Impact

This involves a detailed analysis of your family’s financial situation, including income sources, debt obligations, and future expenses such as education and retirement.

For example, considering income replacement needs is crucial if the family’s primary earner were to unexpectedly pass away or become disabled. How much income would be needed to sustain the household’s current lifestyle, and for how long?

Additionally, evaluating any debts and ongoing financial obligations, such as mortgages or car loans, is essential. Future expenses like college tuition and retirement savings need careful consideration to ensure that long-term goals can still be met in the face of challenges.

Assessing these areas helps you understand the financial stakes involved and guides you in selecting the appropriate levels and types of coverage.

Match Insurance Products To Needs

Finally, the information gleaned from identifying risks and assessing financial impact must be used to select the appropriate insurance products, balancing the cost of premiums against the breadth and depth of coverage.

Prioritizing essential coverage areas is key—life and health insurance are typically fundamental, but disability, property, and other liability coverage should not be overlooked.

Working with a financial advisor can be particularly helpful in this stage. They can provide expert guidance on the types of insurance products that would best suit your family’s needs and help develop a customized plan that considers both current and future financial scenarios.

This tailored approach ensures that your insurance portfolio is as effective and efficient as possible, providing confidence that your family is well-protected against life’s uncertainties.

Tips For Choosing The Right Insurance Company

Research insurance companies.

Start by investigating the financial strength and stability of potential insurance providers. An insurance company with a strong financial rating is more likely to be able to meet its obligations to policyholders, especially in paying out claims.

Agencies like A.M. Best, Moody’s, and Standard & Poor’s provide ratings that indicate an insurer’s financial health and claims-paying ability.

Customer service is another critical aspect. Responsive, courteous service can make the process of filing and settling claims smoother and less stressful.

Lastly, consider the flexibility and variety of policy options. A company that offers a range of insurance products and customizable features provides more opportunities to tailor coverage to fit your specific needs. This flexibility can be particularly valuable as your insurance needs evolve.

Compare Quotes And Coverage

Obtain quotes from multiple insurers to compare costs and coverage details. Use online comparison tools to streamline this process, but make sure to look beyond the price. Analyze the specifics of what’s covered, their limits, and any exclusions or conditions.

Consider working with an independent insurance agent who can offer a range of products from different insurers. These agents are not tied to one company and can provide unbiased advice based on your needs. They can also help you navigate complex policy details and fine print, ensuring you make an informed decision.

Read Reviews And Testimonials

Look for information from current and former customers to gauge their experiences with the insurance company, particularly in terms of customer service and claims handling. For example, websites like Consumer Reports, Trustpilot, and Better Business Bureau can offer insights into customer satisfaction and common issues.

Seek recommendations from friends, family, or professional contacts who have had direct experiences with insurance companies. Personal anecdotes can provide context that raw data and online reviews cannot, such as how the company treats its customers during stressful times.

Final Thoughts

Insurance protects your family from the financial strain of unexpected circumstances, ensuring that you can navigate life’s challenges with greater ease and security.

Remember to regularly review and update your policies to ensure that your coverages are aligned with your family’s circumstances. Consult expert financial advisors for tailored guidance.

By carefully selecting and managing your insurance coverage, you create a robust safety net that can help maintain your family’s lifestyle and aspirations, even when faced with adversity.

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Surrendering life insurance policies can cost you – How about selling them in secondary market?

I n India, life insurance remains an underutilised investment avenue, with a penetration ratio of just 3.20 percent of GDP and a density of $69 (premium in USD per capita), ranking among the lowest globally. One reason for this underutilisation is the long-term commitment required by life insurance premiums, which can become burdensome amidst changing financial priorities and life circumstances. Many policies lapse due to non-payment, often driven by misconceptions about returns and the perceived inflexibility of life insurance as a financial product.

To address these challenges, there’s a compelling case for formalising India’s secondary market for life insurance policies. Unlike in developed markets such as the US and Canada, where such markets thrive, India’s secondary market remains largely informal and unregulated. Moneylenders in industrial towns often acquire policies from cash-strapped individuals, providing immediate relief in exchange for policy ownership.

Life policies’ assignment will help unlock liquidity

A formal secondary market would transform this landscape, benefitting policyholders, investors, and insurance companies alike. Policyholders would have the opportunity to unlock the cash value of policies they no longer need, receiving fair compensation for their investments. Institutional investors would gain access to a novel low-risk, high-profitability investment avenue, while insurance companies would witness increased demand and attractiveness for life insurance products.

Also Read: Joint Home Loan: Key things to keep in mind before taking a joint loan

The potential benefits extend beyond individual stakeholders. A formal secondary market could inject significant liquidity into the economy by unlocking the value trapped in lapsed and forgotten policies. This idle capital could then be channelled into productive investments, benefiting broader economic growth.

Policyholders will stand to benefit significantly. One key advantage is the ability to monetise their life insurance policies through assignment. Through this process, policyholders can assign their policies to institutional investors or other interested parties in exchange for immediate liquidity. This arrangement offers policyholders an alternative to surrendering their policies or letting them lapse, thus realizing the intrinsic value of their insurance investments.

The process of life insurance assignment

The process of assignment involves the policyholder transferring the rights and benefits of the insurance policy to a third party, typically an investor or a financial institution. This transfer is facilitated by formal agreements and processes that ensure transparency and fairness. By engaging in assignments within a regulated secondary market, policyholders can negotiate competitive terms and receive fair compensation reflective of the policy’s worth.

Recently, innovative financial instruments backed by life insurance policies have made their debut on the Bombay Stock Exchange. For instance, Pass-through-certificates (PTCs) issued by India Endowment Trust, backed by LIC policies, offer investors a risk profile akin to sovereign bonds with guaranteed returns. These initiatives signal a promising shift towards leveraging life insurance assets in new and innovative ways within India’s financial ecosystem.

Government and regulators play a crucial role in overseeing and facilitating the formalisation of India’s secondary market for life insurance policies. The India Endowment Act is a key regulatory framework designed to support initiatives like pass-through-certificates (PTCs) issued by entities such as the India Endowment Trust. These regulators ensure that transactions within the secondary market adhere to legal and ethical standards, thereby safeguarding the interests of policyholders, investors, and insurance companies.

An underutilised avenue

The landscape of life insurance in India is evolving, driven by a recent surge in market interest amidst rising LIC (Life Insurance Corporation of India) Ltd’s share prices. However, amidst this financial excitement, the core purpose of life insurance often gets overshadowed. Life insurance plays a vital role in protecting families against unforeseen circumstances, providing a safety net for loved ones in times of need, besides promoting long-term investments.

Despite its importance, life insurance remains underutilised in India, with low penetration rates and policy lapses due to changing financial priorities and misconceptions about returns. To address these challenges and unlock the true value of life insurance, there’s a compelling case for formalising India’s secondary market for life insurance policies. This transformation not only benefits policyholders seeking liquidity but also presents a promising opportunity for investors and insurers to optimize the financial landscape for greater inclusivity and efficiency. Life insurance isn’t merely an investment vehicle for short-term gains; it serves a crucial role in protecting against life’s uncertainties and safeguarding loved ones in the event of a breadwinner’s demise.

Benefits for policyholders, insurers and investors

In conclusion, formalizing the secondary market for life insurance policies represents a transformative step towards enhancing financial inclusivity and efficiency in India. By empowering policyholders to unlock liquidity, providing investors with attractive investment opportunities, and bolstering the appeal of life insurance products, this market evolution holds the potential to reshape India’s financial landscape for the better.

(By Ranjit Kulkarni, Research and Strategic Acquisition Head of ACESO)

Disclaimer: Views and facts expressed above are those of the author. They do not necessarily reflect the views of financialexpress.com . Readers are advised to consult their financial planner before making any investment.

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Kangana Ranaut has 50 LIC policies: Good or bad idea. Here's what financial experts have to say

While ranaut's property portfolio consists of real estate investments, her financial portfolio also includes a substantial investment in insurance policies, with a notable holding of 50 life insurance corporation (lic) plans in her name..

• Updated May 17, 2024, 11:35 AM IST

Kangana Ranaut made headlines on Tuesday by disclosing her extensive assets totaling over Rs 91 crore, as per media reports. As per her affidavit, Ranaut holds movable assets valued at Rs 28.7 crore and immovable assets amounting to Rs 62.9 crore. Notably, she also carries a debt of Rs 17.38 crore.

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While Ranaut's diverse property portfolio consists of real estate investments, her financial portfolio also includes a substantial investment in insurance policies, with a notable holding of 50 Life Insurance Corporation (LIC) plans in her name.

For commoners having 50 or more insurance policies is a bad idea. Venkatesh Naidu, CEO - BajajCapital Insurance Broking Ltd, said, "Having 50 insurance policies is like trying to juggle too many balls at once. It can be confusing, expensive, and might even leave you unprotected in some areas. Imagine if you have insurance for your car, your home, your health, and so on, but you have 50 separate policies for each little thing. It's a lot to keep track of. Plus, you might end up paying for similar coverage multiple times without realising it. And when it comes time to actually use your insurance, dealing with all those different companies and policies can be a real headache."

Tracking premiums, coverage specifics, renewal dates, and beneficiaries for each policy demands substantial time and resources.  Filing claims across a multitude of policies can be a logistical nightmare. Instead, it's smarter to have a few key insurance policies that cover all your important bases albeit you are buying it for protection and not for investment purposes. Hence, that way, you'll have the protection you need without all the extra hassle and cost," added Naidu.

Echoing similar views, Rakesh Goyal, Director of Probusinsurance.com, said, "Having an extensive array of 50 insurance policies might initially seem like an air-tight safety net. However, the reality is far from reassuring. Managing such a vast portfolio is akin to maintaining a tangled web of financial commitments, each with its own set of intricacies and demands. Imagine the logistical nightmare of keeping track of premium payments, understanding the nuances of multiple policies, and ensuring compliance with various terms and conditions. It's a Herculean task that not only consumes valuable time and mental bandwidth but also increases the risk of overlooking critical details or deadlines. In the event of a claim or when these policies mature, the administrative burden only amplifies, potentially leading to confusion, delays, and even financial losses. Thus, while diversity in insurance coverage is crucial, an excess of policies only serves to complicate matters unnecessarily."

Coverage required

The amount of life insurance coverage one needs depends on various factors such as their financial obligations, lifestyle, and future goals. Generally, experts believe regular individuals should consider having 15-20 times annual income of policy coverage to replace their income in case of death, disease or disability, pay off debts and provide for their dependents' financial needs.

The crucial methods to calculate the amount of coverage is using the human life value (HLV). This assessment considers various financial obligations individuals must address throughout their lives. It includes factors like estimating the annual income required by dependents, duration of financial support needed, outstanding debts, children's education expenses, burial expenses, existing savings, current life insurance coverage, inflation rates, and potential lifestyle changes.

One can check HLV online via using HLV calculators by answering simple questions. This process of assessing coverage give you desired requirement of coverage. Alternatively, individuals can manually calculate their coverage requirements by summing up their financial responsibilities and deducting existing assets available to settle bills.

"For HNI individuals like Kangana with net worth upwards of 90-100 crore, they may require less coverage for income replacement and debt repayment compared to individuals with lower net worth. They can choose to invest in a traditional investment policy and benefit by wealth preservation, beat inflation and for tax efficiency purposes," said Vivek Jain, Head-Investments, Policybazaar.com.

How to plan to buy insurance policies

One of the first things to ponder when buying a life insurance policy is the amount of coverage needed. It's important to align this decision with the primary goal of life insurance: ensuring financial support for your family in case of your premature death or inability to work due to a chronic illness.

For instance, term life insurance plans offer death benefits to nominees either as lump sums or in instalments, making them the most straightforward life insurance option. They are popular due to their affordability and high coverage. New-age variations cater to specific consumer needs like homemakers, self employed individuals etc.

"One can opt for Unit Linked Insurance Plans (ULIPs) insurance cum investment plans, historically providing returns of 12-14% under favourable market conditions. They offer wealth creation opportunities alongside life protection and tax benefits," said Jain.

Another option can be guaranteed plans that are gaining popularity for their value proposition, providing returns of up to 7.5% without market risks. They serve as both an investment and insurance option, offering tax benefits as well.

Naidu said, "Determine whether you seek regular, long-term income or a lump sum for specific, non-negotiable goals. Consider whether you need immediate income or can postpone it. Decide on the type of policy you desire: guaranteed plans which typically offer guaranteed 6 to 7% tax free returns, offering assured income over the long term with no reinvestment risk as you can lock in today's interest rates, or ULIP plans, which involve risk through equity investment."

"Once you have identified these factors, explore different companies and their offerings, focusing on features that align with your needs. Look for flexibility in premium payment options, such as single or regular payments spanning starting from a 5-year term, and customize policy duration according to your goals and preferences," added Naidu.

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Private Equity Firm Accused of Buying Life Insurance Policies on Old People to Profit From Their Deaths

"senior citizens have no idea who owns a policy on their life, and who wants them dead.".

In a new lawsuit filed in Delaware, the equity firm Apollo Global Management Inc has been accused of "carrying out a widespread fraudulent human life wagering conspiracy."

Translation: the company was, as the estate of one alleged victim claims, taking out life insurance policies against the lives of the elderly in hopes that they'd die soon and they could collect big — and, as the suit details, going out of its way to hide it, too.

This scheme, as the estate of the late Martha Barotz details, was "designed to not only hide its involvement, but to create the false appearance that the policies it owns are somehow legitimate."

As the Financial Times explains in its reporting on the suit, the Barotz case goes all the way back to 2006, when the then-70-something woman allowed a company called Life Accumulation Trust III to take out a policy in her name. In exchange, she was given $150,000, or three percent of the policy's multi-million dollar total benefits — and, as her son Nathan alleges in his years-long legal campaign, signed away the rest to strangers with his mother none the wiser.

Known as " stranger-originated life insurance ," or STOLI, this broadly illegal practice involves involves investors taking out policies in someone else's name, allegedly to help increase the death benefits because the person insured doesn't have many assets of their own.

Often marketed as "zero premium life insurance" or "estate maximization plans" because policy owners pay premiums on policies, this predatory, unethical, and illegal practice is especially dangerous for the elderly, who can be easily manipulated into signing onto such plans without reading the fine print.

"In this way, the senior citizens have no idea who owns a policy on their life, and who wants them dead,” the Barotz suit maintains. "This is precisely what happened with the policy here."

Despite their illegality, STOLI policies were, as the  FT notes, very popular in the mid-to-late 2000s, and companies circumvented the laws banning it by having people create trusts and sign control of them. All the same, any policy owned by someone unrelated to the deceased in question can be considered void, which is what the Barotz family has been trying to do for years now.

After Barotz initially signed on with Life Accumulation, her policy was later sold to a fund that is, as the suit alleges, controlled by Apollo. She passed away in 2018, and the $5 million lump sum from her policy was sent to that fund.

Ultimately, the estate was successful in its bid and in January won its case before the Superior Court of Delaware — where Apollo, like millions of other companies, is registered — that ordered a payout of $6.9 million for damages.

This latest complaint, however, argues that Apollo tried to circumvent the court's judgment by liquidating the shell firms that would make the payouts in an effort to make it seem like it couldn't pay.

Apollo, on its end, denied wrongdoing to the FT and said that what the suit describes is "a gross mischaracterization, disingenuous, and flat out wrong."

It's hard to deny something a judge has already ruled to be true, but when you're playing around with people's lives and money, boldness apparently comes with the territory.

Updated to correct the lump sum from Barotz' policy.

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