absolute assignment of life insurance policy form

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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Understanding Life Insurance Assignments: Your Complete Guide

A life insurance assignment allows you to transfer the rights of your policy, either temporarily or permanently.

Learn how collateral and absolute assignments can be used for loan collateral, estate planning, and other financial purposes.

Medicaid Planning

What is a collateral assignment.

Collateral assignments are used to secure a lender’s financial interest in your policy in exchange for lending you money.

If you die, the collateral assignment allows the lender to collect your policy’s death benefit up to the amount of the outstanding loan balance.

How Do Collateral Assignments Work?

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.

One of the most common uses for collateral assignments is with SBA loans , especially if you do not have other assets to post as collateral.

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

The Collateral Assignment Process: A Step-by-Step Guide

The process is similar whether you are adding the assignment to an existing policy or 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 completed by the lender, the form is sent to the insurance company.
• The insurance company records the assignment and confirms to the owner and lender that it 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.

Releasing a Collateral Assignment

When you pay off your loan, you have the right to have the collateral assignment released.

It’s a simple process :

• The policy owner completes the form and sends it to the lender.
• The lender signs off on the release. Many companies require a notary as a witness. The lender may return the form to the owner or the insurance company.
• Once completed and returned to the insurance company, the release is recorded, and all parties are notified.

Companies typically complete this process in about a week, and it’s a good idea to confirm everything with the home office to avoid potential issues.

Your agent can help with this.

What Happens to a Collateral Assignment if You Die?

How do collateral assignments work when you die?

Your beneficiary will file a death claim with the life insurer at some point.

Collateral Assignment Tip # 1

If your beneficiary is a loved one, it’s a good idea to let them know that your policy has a collateral assignment so they are not surprised when they file the claim.

Here’s an example of how a death claim with a collateral assignment works:

• Policy Face Amount = $5,000,000
• 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 life 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 $4,900,000.

Collateral Assignment Tip # 2

NEVER name your lender directly as a beneficiary. If you do, the lender will receive the entire death benefit, and your intended beneficiary will have to go through the lender to receive their share.

Collateral Assignments and Health Issues

While lenders may want a life insurance policy as collateral, obtaining life insurance can sometimes be difficult if the insured has substantial health issues .

If you have an existing life insurance policy in effect, you can 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. And we’ve also seen lenders waive the collateral assignment requirement at times.

What is an Absolute Assignment?

An absolute assignment is a change of ownership of the policy.

When you want to permanently relinquish your rights to the life insurance policy, an absolute assignment is used.

Examples where absolute assignments are used include:

Life Insurance Settlements

1035 exchange, gifting life insurance to charities, irrevocable life insurance trusts (ilit), business insurance planning.

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

If it is a term policy, you would convert a term policy to permanent insurance before it is sold. In some cases, a company will buy the term policy.

Another example may involve admitting seniors to a nursing home, where the nursing home may take over the policy you have.

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

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

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

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.

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

Many times, this happens if the employee leaves the company or retires.

You may have a policy permanently assigned to a nursing home or assisted living facility to help with long-term care expenses.

How Do Absolute Assignments Work?

Life insurance companies have forms used for Absolute Assignments.

Absolute assignment forms require:

• Current owner name, address, and tax ID information.
• New owner name, address, and tax ID information.
• Relationship to the proposed insured.
• Spousal consent in some states and situations.

The completed forms are submitted to the insurance company, recorded, and confirmations are sent to all parties.

Frequently Asked Questions About Life Insurance Assignments

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.

Final Words

Life insurance assignments are common for absolute and collateral assignments.

What is most important is that you 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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• Life Insurance Glossary
• Absolute Assignment

What is Absolute Assignment in Life Insurance?

<lingo>In life insurance, the term absolute assignment refers to the transfer of all interest, rights, and ownership of an asset — in this case, the life insurance policy. This decision is irrevocable, which means it cannot be changed once it is in place. It also applies both to the present and in the future. For those who are purchasing a life insurance policy, it is important to look for a clause like this in the details and to understand what it means to use absolute assignment. In short, all rights and ownership of the policy are being given to another person, specifically listed in the policy.</lingo>

Absolute Assignment Clearly and Briefly Explained

There are numerous reasons why you may wish to pursue an absolute assignment. For example, it may be used in the process of providing collateral for a loan to a lender. In addition to this, some may elect to use this when you wish to donate the proceeds from your life insurance policy to a charity or award them to a specific purpose after your death.

<twitter>In life insurance, the term absolute assignment refers to the transfer of all interest, rights, and ownership of an asset — in this case, the life insurance policy. </twitter>

One way to look at absolute assignment is that it allows you to transfer ownership — all ownership — to another party. When you make this transfer, you remain covered under the life insurance policy. However, the new owner of the policy has the right to make changes to it. For example, they can change the beneficiary of the policy. Most often, this will be done to change the beneficiary of the life insurance policy to the new owner’s name. In addition, the new owner now has the ability to make all decisions regarding the underlying assets within the investment. The only thing that the new owner cannot do is to eliminate the coverage of the plan.

When absolute assignment occurs, you continue to make payments on it. One common use of this is when you are taking out a loan and the bank is concerned about your age or health. They may require you to take out a life insurance policy and assign absolute assignment. This would help cover the value of the loan should you die while it is in place.

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Absolute Assignment

What does absolute assignment mean.

Absolute assignment refers to a policyholder transferring his or her ownership of a policy to another party. That transfer means that all of the coverage within that policy will now go to the newly named party. The original owner of the policy does not have to state his or her reasons for doing so nor does he or she need to stipulate any conditions for the transfer.

Insuranceopedia Explains Absolute Assignment

There are a number of reasons why a policyholder transfers all of their rights to a policy to another person or entity. They might think of it as a gift to someone else. It could be the sole means of paying off a loan. Even if the insured has now given up their rights to all of the claims and privileges, they are still responsible for payments for the policy. The new owner might have been asked by the original owner to pay the insurer after the transfer is completed, but if the newly named party fails to do so, the negligence will not be blamed on that person but on the original policyholder.

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Assigning Your Life Insurance Policy

Getting approval on a loan can sometimes depend on one or two very important issues. For example, lenders often ask borrowers the question, “How will this loan be repaid in the event of your death?” Your answer may be to suggest assigning your life insurance policy.* This useful feature of a life insurance contract can help provide the necessary comfort level and security for a lender.

You can freely assign your life insurance policy unless some limitation is specified in your contract (your insurance company can furnish the required assignment forms). Through an assignment, you can transfer your rights to all or a portion of the policy proceeds to an assignee. The extent to which these rights are transferable depends on the assignment provisions in the policy, the intention of the parties as expressed in the assignment form, and the actual circumstances of the assignment.

In general, no interest deduction is allowed when the indebtedness is used to purchase or carry a life insurance contract. However, there is an exception that will allow the interest deduction as long as the indebtedness is incurred in connection with a trade or business.

Types of Assignments

There are two types of conventional insurance policy assignments:

•  An absolute assignment is normally intended to give the assignee every right in the policy that you possessed prior to the assignment. When the transaction is completed, you have no further financial interest in the policy.

The terminology of absolute assignments differs from contract to contract. In essence, it states that you transfer all rights, title, and interest in the policy to the assignee. Some insurance companies use an “ownership clause” to accomplish this transfer.

• A collateral assignment is a more limited type of transfer. It is a security arrangement to protect the assignee (lender) by using the policy as security for repayment. After the indebtedness is repaid, the assignee releases his or her interest in the policy.

In other words, the assignee will revert to you the rights transferred by the assignment. Under the usual procedure, if the collateral assignment is still in force at your death, the assignee informs the insurance company of the remaining indebtedness, including interest, and receives that amount in a lump sum. Any excess proceeds are then payable to your named beneficiary in accordance with the beneficiary designation in your policy.

To fully protect the assignee, notice must be given to the life insurance company that the assignment has been made. If a company with no notice of assignment makes payment of the proceeds to another assignee or to a named beneficiary, the insurance company cannot be made to pay a second time.

Policy Provisions

Some typical policy provisions concerning assignments may include the following:

• The assignment will not be binding until the original, or a duplicate thereof, is filed at the insurance company’s home office. 
• The insurance company assumes no obligation as to the effect, sufficiency, or validity of the assignment. 
• The assignment is subject to any indebtedness to the insurance company on the policy. Thus, it is important to ensure that an assignment is made properly, regardless of whether it is absolute or collateral.

*Although loans generally are not taxable, there may be tax consequences if the policy lapses or is surrendered (even as part of a 1035 exchange) with a loan or assignment outstanding. The taxable income from the surrender, 1035 exchange, or lapse of the policy may exceed the cash proceeds received from it. If the policy is a modified endowment contract (MEC), pre-death distributions from the policy, including loans and assignments, are taxed on an income-first basis, and there may also be a 10% federal income tax penalty for distributions prior to age 59½.

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• Customer Services
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• Assign Policy to New Owner

Assign policy to new owner

Assigning a policy to a new owner, also called an absolute assignment, is a transfer of ownership from the assured (assignor) to another person or company/institution (assignee). 

The assignee becomes the new policy owner and assumes full legal rights over the policy. All proceeds, including surrender, maturity, and claims will be payable to the assignee.

A policy can be assigned if both assignor and assignee are of sound mind, not bankrupt or under duress, and if the policy is:

• Not using CPF/SRS funds for premium payments
• Not effected under trust
• Not used to be exempted from CPF Board's Home Protection Scheme (HPS)
• Allowed to be assigned under the plan

Additionally, the assignor must be at least 18 years old. For policies issued on or after 1 March 2009, the assignee must be at least 18 years old. For policies issued before 1 March 2009, the assignee must be at least 21 years old.

How to assign a policy to a new owner

Both the assignor and assignee must come to our Customer Service Centre at the following address with their NRICs:

1 Pickering Street Great Eastern Centre #01-01 Singapore 048659

If the assignment is made between spouses, parent and child, or siblings, and relationship can be established by producing a marriage or birth certificate, they need not be present at our Customer Service Centre. You can call our Customer Service Officers at 1800 248 2888 for assistance in making the assignment.

Questions and Answers

No. Once a policy is absolutely assigned, the policy ownership will belong to the assignee. However, the policy ownership can be transferred back to you provided the assignee agrees to it. A new assignment will need to be done.

You can still assign the policy if the nomination made is a revocable nomination. The revocable nomination will be automatically revoked once the policy is assigned. If the policy has a trust nomination, the trust nomination will have to be revoked before you make an assignment.

Agla5051 Form – Fill Out and Use This PDF

The Agla5051 Form is a form used by the Department of Defense to report and update information about Agla5051.

Agla5051 Form PDF Details

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Form Preview Example

Absolute Assignment Of Life Insurance Policy / Annuity Contract

Local Office ___________ Agency _________

A. ASSIGNMENT: Check Applicable Box (Check only one):

interest in and to Policy/Contract Number _________________________________ (including all SupplementaryAgreements or Riders

attached thereto, but not changing the contractual provisions concerning payment of benefits) which is now the liability of American General Life Insurance Company (herein called the “Company”) for which_________________________________________________

(Insured/Annuitant Name)

is the Insured orAnnuitant. It is understood by the undersigned that if the subject life policy was issued when the insured was a juvenile, this assignment may be subject to policy provisions, if any, which designate the insured as owner upon the attainment of a specified age.

REPRESENTATION

I (We) represent to the Company that no Bankruptcy or insolvency proceedings have been instituted by or against me (us), that no party (other than the Company) has a claim against the Policy/Contract, and that no assignment of the Policy/Contract, other than previous assignments recorded by the Company, is now in effect.

CERTIFICATION: Under penalty of perjury, I certify that:

1. The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me), and

2. I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or

(c) the IRS has notified me that I am no longer subject to backup withholding, and

3. I am a U.S. citizen or other U.S. person (as defined in the instructions to IRS Form W-9), and

4. The FATCA code(s) entered on this form (if any) indicating that I am exempt from FATCA reporting is correct.

Certification Instructions. – You must cross out item 2 above if you have been notified by the IRS that you are currently subject to backup withholding because you have failed to report all interest and dividends on your tax return.

Notice - Change of ownership on certain annuity or modified endowment contracts may create tax consequences. The current owner should seek professional tax advice if there are any questions. The Company assumes no responsibility for the validity or sufficiency of any assignment.

The Internal Revenue Service does not require your consent to any provision of this document other than the certification required to avoid backup withholding.

X______________________________________ X _______________________________________________________ X _______

Witness (Non-Related) Signature of Owner (and title, if applicable) Social Security Number or Tax ID Date

Witness (Non-Related) Other Required Signature Social Security Number or Tax ID Date

________________________________________________________________________________________________________

(Social Security #) (Email) (Phone #)

X_______________________________________________________________________________________________________

(Contingent Beneficiary) (Relationship to Insured) (Address)

The [Assignee(s)] hereby authorizes and directs the Company to deal with him/her as absolute owner(s) of said policy/contract at, until further notice, the following address:

B. ASSIGNEE(S) INFORMATION

DESIGNATION OF PRIMARY BENEFICIARY:

(Name) (Relationship to Insured) (Address)

DESIGNATION OF CONTINGENT BENEFICIARY:

American General Life Insurance Company

P O Box 305355 • Nashville, TN 37230-5355

© 2014 American International Group, Inc. (AIG). All rights reserved.

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Absolute Assignment of a Life Insurance Policy

Absolute Assignment means complete Transfer of Rights. The person who transfers the rights is called the Assignor and the person to whom the rights are being transferred is called the Assignee.

The process of transferring rights of a Life Insurance Policy is called Assignment. There are 2 types of Assignment.

• Absolute Assignment
• Conditional Assignment

Hence Absolute Assignment means completely transferring whole and sole rights of the policy from the Assignor to the Assignee without any further terms and conditions applicable.

The process of assignment is complete only when the original Policy Document has been endorsed or a fresh Policy Document has been issued in favour of the Assignee.

Let’s take an example:

Rahul owns a Life Insurance policy of value Rs 5 lakhs. He would like to gift it to his best friend Ajay.

Thus, in that case, he would like to perform Absolute Assignment of the policy in Ajay’s name such that the death or maturity proceeds are directly paid to him. Rahul’s family members or nominee does not have any right on the policy money.

After the assignment is executed, 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 without any further clauses attached to it is called Absolute Assignment.

Example in real life of Absolute Assignment happens in case of an Insurance Policy being taken by the employer as a perquisite for the employee. Once the policy is purchased, it is transferred to the employee’s name under Absolute Assignment clause. Hence the employee becomes the owner of the policy, but the employer pays for it till the end. Thus, instead of paying the employee cash, they purchase an insurance policy in their name and add it to their Annual Income Package.

Deepak Yohannan is the Founder &amp; CEO of MyInsuranceClub. He enjoys writing on Personal Finance and focusses on explaining the basic concepts of insurance in simple language.

What is Absolute vs Collateral Assignment of Life Insurance?

by Life Credit Company | Mar 15, 2018 | Understanding Your Life Insurance Policy | 2 comments

When you purchase life insurance, you typically do so to prepare for after your death. However, an insurance policy is an owned entity and, as such, can be sold or used as collateral for a loan in order to provide cash value to someone in need.

Just as there are many questions when considering whether to get  term insurance or whole life insurance , there are also a lot of factors to consider if you choose to use your policy to access the cash you’ve invested in it. It’s important to understand terms like absolute assignment and collateral assignment, as well as weigh the differences, in order to satisfy your particular financial needs.

What is absolute assignment of life insurance?

Absolute assignment in insurance involves signing over your entire policy to another person or entity. The person who is selling or gifting the policy is known as the assignor, and the individual or individuals who receive it are the assignee. The assignee takes full ownership of the policy, being held liable for any premiums and also having the authority to change or designate new beneficiaries.

What is a collateral assignment of life insurance?

Collateral assignment of life insurance essentially works like a standard loan. The insurance policy is “collateral” for a loan, and the person or organization that pays out that loan is the temporary beneficiary of the policy’s death benefit until the loan is repaid. The entity taking over the policy does so on a conditional basis and, therefore, doesn’t have the authority to make changes to it, re-sell it or take any of its cash value. Instead, the assignee can only draw on the death benefit if the policyholder defaults.

This type of approach is used by Life Credit, through the Living Benefit Loan program, which provides up to half of the value of a death benefit for a policy worth at least $75,000. This loan enables cancer patients and seniors to access immediate and unrestricted assistance to help reduce financial burden.

Compare Life Insurance Policy Assignments

If you’re facing a financial challenge and asking yourself, “ Can my life insurance policy’s cash value help me? ” then one of the most important things you can do is look at the big picture.  An absolute assignment type of approach may allow you to generate a lot of quick cash, however, down the line, you or your family will not have any protection and cushion from a life insurance policy. This may be a policy that you have paid into for decades, so losing that value is a significant consideration.

Collateral assignment, on the other hand, enables policy holders to regain control of their own policy once a medical or other crisis has resolved. It is one of the  3 common ways to borrow from your life insurance policy  and access the cash value. With a collateral assignment you are able to eventually benefit again from the long-term advantages of a life insurance policy. Most people are used to paying car loans, student loans and mortgages, so treating this agreement similarly and making the requisite payments can help people to not only address their immediate financial concerns but also ensure long-term success.

Contact a Life Credit representative to  find out if you qualify for a life insurance loan .

Life Credit Company

We are a licensed consumer lender that is dedicated to providing financial assistance for patients who are facing serious illness. With a Living Benefit Loan, from Life Credit Company, you can receive up to 50% of your life insurance policy’s death benefit today. Whether you need to catch up on medical bills, consolidate debt or take your family on a dream vacation, this is your money to spend without restrictions. If you have at least $75,000 of life insurance and have been diagnosed with cancer or other serious medical condition, you may qualify for a loan. Contact us today to speak with a professional counselor who is standing by to assist you.

Where can I get a collateral loan from? what company offers this type of loan?

Please call us at 844-556-1269 for more information.

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Welcome Funds has compiled every term, phrase & definition related to life settlements. Have more questions? Call us toll-free at 877.227.4484 or complete our Quick Life Settlement Qualifier to determine your eligibility.

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WHAT IS ABSOLUTE ASSIGNMENT?

Absolute Assignment is a legal instrument that allows the owner of a life insurance policy or other valuable assets to transfer all rights and ownership of the asset to a designated assignee. This transfer of ownership is comprehensive and unrestricted, giving the assignee complete control and authority over the asset. Unlike conditional assignment, which may have specific conditions attached, absolute assignment represents an unqualified transfer of ownership..

Absolute assignment can be used not only in the context of life insurance but also for transferring ownership of other valuable assets such as real estate and securities. It involves a meticulous adherence to legal requirements and procedural details to ensure the validity and legality of the ownership transfer. Seeking guidance from legal and financial experts is essential to ensure a smooth and legally sound execution of the absolute assignment process.

Exploring Life Settlements

When considering selling a life insurance policy, individuals have the option to engage in a life settlement, wherein the policy is sold to institutional buyers in the secondary market. This process involves applying to various licensed buyers who compete to offer the highest bid for the policy. An experienced life settlement broker can facilitate this auction-style bid process, ensuring that policy owners receive the best possible offer for their policies.

Welcome Funds: Your Life Settlement Partner

Welcome Funds is a nationally licensed life settlement broker that specializes in representing policy owners in the secondary market for life insurance. They engage in an auction bidding process to secure the highest offer from institutional buyers, providing professional representation and expert counsel throughout the sale of the life insurance policy.

Explore Your Options with a Life Settlement Qualification Process

To explore the eligibility of a life insurance policy for a potential life settlement, individuals can embark on a cost-free and commitment-free journey by engaging in the Life Settlement Qualification Process. This process includes a complimentary personal consultation & appraisal, during which confidentiality is safeguarded. Interested individuals can complete a Quick Life Settlement Qualifier online or call a toll-free number to connect with a dedicated client care advocate.

Overall, the combination of absolute assignment and the life settlement process provides individuals with a means to transfer ownership of valuable assets and explore options for selling their life insurance policies in a competitive market.

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Complete our quick Life Settlement Qualifier or call us toll-free at 877.227.4484 to speak with a client care advocate.

LIFE SETTLEMENT BLOG

Direct Life Settlement Buyers vs. Welcome Funds – Advisor Beware!

Posted: by John Welcom

Welcome Funds has the privilege of working with numerous financial advisors and wealth managers – and have done so for two decades – some who exclusively focus on servicing high net worth clients. One such advisor who is active in the life settlement market — and already understands the value he can create for his clients — had historically negotiated directly himself with two or three leading buyers of life insurance policies. He thought that simply engaging with mor...

How to Sell Your Life Insurance Policy for $4,743,000 Instead of $275,485?

Mr. Williams purchased $10 Million in life insurance coverage in 2001 to provide his family with financial security. Over time, his financial priorities changed: his wife passed away, his children became financially independent, financial burdens arose and the estate tax exemption increased substantially.

Suitability of Life Settlements

Traditionally, estate planning advisors counsel their high net worth clients to obtain life insurance policies with large death benefits. The strategy is simple: create a vehicle for heirs to receive tax-free income at the time of an insured’s passing so sufficient funds are available to pay large estate tax bills when assets are inherited.

What is the Most Suitable Exit Strategy for Life Insurance?

All eyes in the life insurance agency and the financial advisory world have been on New York, where in the summer of 2019, the New York State Supreme Court paved the way for implementation of Insurance Regulation 187.  This rule imposes a new standard for agents and brokers when issuing a recommendation to a client regarding an annuity or life insurance product.

How to Get the Highest Life Settlement Offer

When you decide to sell a valuable personal asset, you usually want to obtain the highest purchase price for that property. It is sound business sense. However, how do you truly know when you have reached the point of accepting and securing the most desirable offer?

Understanding the Fair Market Value of a Life Insurance Policy

When a professional advisor identifies a life insurance policy that a client no longer needs or wishes to maintain, he should ask, as standard protocol, whether that policy may have value in the secondary market. If so, the client may be able to sell the policy in a life settlement transaction, enabling him to receive a higher cash payout than he otherwise would obtain by lapsing or surrendering the policy back to the insurance company.

The Power of a Life Settlement Auction

Professional advisors with clients who no longer need or wish to maintain a life insurance policy have options when exploring the secondary market.  Many advisors prudently rely on a licensed life settlement broker to assist them in the sale of the policy and with all aspects of the transaction.  However, there is still a large number of professionals persuaded to work directly with only one buyer, called a life settlement provider.

Rebuttals to the “Direct Buyer” Model for Life Settlements

Most professional advisors who explore the potential sale of an unwanted life insurance policy on behalf of their clients will rely on the assistance of a licensed life settlement broker. Life settlement brokers represent the policy owner in the transaction and have a duty to act in their best interests. Most notably, the broker’s and client’s goal is aligned: to sell the policy for the highest price possible.

Carrier Resistance To Life Settlements: Clients Need To Know They Can Sell Their Policies

Consumers who sell their life insurance policies in the life settlement market receive as much as seven times more money than they would have received by surrendering their policies back to the insurance companies.  Seven times!  However, an estimated 9 out of 10 policies are allowed to lapse before paying a claim, according to the Life Insurance...

The Danger of Trying to “Time the Market” for Life Settlements

Most investors in the stock market understand the danger of “market timing” — trying to choose the right day to buy a stock when the price is low and sell it when the price is high.

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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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Assignment of Life Insurance

WARNING! This form permanently transfers ownership of your FEGLI insurance to another individual, trustee, or corporation (however, premiums continue to be withheld from your salary/annuity). An assignment is irrevocable, and cannot be changed later. DO NOT USE THIS FORM if you only wish to designate a beneficiary to receive your life insurance. Instead, use the available designation of beneficiary form .

For more information about assignments and designations of beneficiary, see the FEGLI Booklet on Assignments , and Designation of Beneficiary and Order of Precedence .

FEGLI enrollees use this form to assign ownership of their life insurance coverage to another person, firm, or trust; and assignees use the form to reassign the coverage.

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• The NAIC can help locate a deceased loved one's life insurance or annuity information.
• To use this free online service, you'll need the person's death certificate and your email address.
• When you submit information, the NAIC will search insurance and annuity companies on your behalf.
• Compare life insurance quotes with Policygenius .

Discussing life insurance information with your family or loved ones is important, but it doesn't always happen. After a loved one's passing, you might be unsure of whether they have a life insurance policy. To submit a life insurance claim, however, you'll need to know which life insurance company holds the person's policy. 

A service offered by the National Association of Insurance Commissioners (NAIC) can help anyone who could be a policy beneficiary locate the person's policy. Filling out the NAIC's form online submits the person's information to insurance companies for a record search, and the service can help you locate the person's policy.

The service allows searches both for life insurance policies and annuities, which are insurance plans purchased to provide future retirement income. The NAIC provides this search service for free. 

It's worth noting that this search service shouldn't be your first step in the process. Before submitting a search, the NAIC recommends checking the person's bank statements for any indication of payments towards a policy, checking safe deposit boxes for information, or other financial records if available. If you find information on their policy, this tool won't be necessary — you can then contact the insurance company directly.

If you've checked around and still can't find any information, the policy locator service could help.

Locating deceased family member's insurance

Gathering necessary information.

Before hunting down a life insurance policy, having these items and pieces of information on hand will make the process easier: 

• The deceased's legal first and last name and any former names (e.g., a maiden name)
• The deceased's Social Security number
• The deceased's date of birth
• The deceased's date of death and death certificate
• The deceased's last and former addresses, especially for any long-time residences
• Proof of your identity (e.g., copy of a government-issued driver's license or passport)
• The deceased's financial records (e.g., bank statements and tax returns) 

Contacting insurance companies 

If you know the insurance company your loved one had a policy with, contact their insurance agent or the company. The insurer may require proof you're the beneficiary, so be prepared to provide your driver's license, Social Security number, and the policyholder's death certificate. 

NAIC's Life Insurance Policy Locator Service

If you don't know the insurance company your deceased loved one has a policy with, the NAIC's Life Insurance Policy Locator Service can help with your search. 

 The NAIC's tool sends the information on your loved one to insurance and annuity companies across the US. These companies then search their records to see if there's a policy on file for that person.  

Only people who may be policy beneficiaries or executors of an estate can submit a request to the NAIC. Any information found by the search can only be passed along if the person submitting the request is the policy's beneficiary or is authorized to receive information.

Most of the information needed to complete the form is available on the person's death certificate. If you don't already have this document, you can order one. The process for getting this can vary from state to state, but the funeral home the family worked with or the county's vital records department is a good place to start. 

After getting a death certificate, you can start filling in information on the locator service's form, which can be found on the NAIC's website.

The information you submit will be passed along to insurance companies for a search. If any results are found, the company will contact you directly by email as long as you are a beneficiary or otherwise authorized to receive that information. From there, you can work with the insurance company to collect the benefit. 

It's worth noting, however, that not all companies participate in this service, as insurers participate on a voluntary basis. There's no guarantee that a policy will be found. If you do find information on a policy, you can start the process of submitting a claim directly with the life insurance company.

National Association of Unclaimed Property Office 

Another resource to look into is your state's comptroller's Unclaimed Property Office. If a life insurance company is aware that a policyholder has died but can't locate the beneficiary, it must turn over the death benefit to the state. 

If you know or can guess the state in which the policy was bought, you can visit the state's Unclaimed Property Office using the locator tool provided by the National Association of Unclaimed Property Administrators . 

Filing a claim

Once you've identified the insurance company and retrieved the deceased's policy information, follow these steps to claim a found life insurance policy: 

• Contact the insurance company: The insurer will provide the claims form and instructions. Claim forms may also be available on the insurer's website. 
• Complete the claims forms: The insurer may require the policyholder's information including their name, date and cause of death (located on the death certificate), state of residence, social security number, and policy number. 
• Submit the death certificate: Obtain the policyholder's death certificate from the funeral home or your state's vital statistics office and submit it with your claim form. Note that each beneficiary must complete a claim form and provide the required documentation to receive their portion of the death benefit. 
• Wait for processing: Insurance companies generally disburse policy proceeds within three to five days. However, it may take longer if the insurer suspects that the policyholder's death is excluded from coverage. Feel free to follow up if the process is taking longer than expected. 

Understanding the policy's benefits

Each beneficiary is entitled to their portion of the death benefit as specified by the policy. An attractive feature of a life insurance policy is that beneficiaries don't pay taxes on the proceeds if disbursed in a lump sum. 

However, if you retain the funds in an interest-bearing account, you'll have to pay taxes on the earnings in the account. Similarly, if the beneficiary receives the death benefit as an annuity or receives multiple payments over time, any interest accrued will be subject to taxes as well. 

According to Policygenius, some deaths don't qualify for coverage. If the policyholder dies due to the following restricted causes, this could nullify your right to the death benefit.

• Death due to engaging in a risky habit or activity is excluded from your policy
• Murder by the policy's beneficiary 
• Suicide within the suicide clause period
• Overdose within the contestability period 
• Death during an act of war or terrorism 
• Drug or alcohol use during the contestability period 
• Death while participating in an illegal activity 

Legal and privacy considerations

Insurance companies must abide by privacy laws when disclosing policy details. Insurers may only provide policy information to the following individuals. 

• The closest living relative (e.g., spouse or child) 
• The policy's beneficiary 
• Estate executors and Trustees 

You'll want to consider your dependent's needs, your financial goals, and your budget when comparing life insurance policy options. If you want affordable coverage until your kids become adults or your mortgage is paid off, term life insurance may be the way to go. Alternatively, if you have lifelong dependents or want to grow your policy to leave a larger death benefit or pay for long-term care costs, a permanent life insurance policy is worth considering. 

You'll need the deceased's personal information including their full name, Social Security number, date of birth, former addresses, and policy information (if available). Financial records, such as bank statements or tax returns, may also reveal information about existing life insurance policies. 

Start by checking the deceased's personal records, such as files, paperwork, or financial documents for evidence of an existing life insurance policy. If you know the insurance company, you can call them directly to provide you with available policy information. The state Unclaimed Property Office and the NAIC policy locator service are also tools that can help you track down potential insurance benefits. 

Challenges such as incomplete information and privacy laws make it difficult to locate a missing insurance policy. Overcome these obstacles by gathering as much information as possible, tapping into available resources for help, and seeking legal advice if necessary.

Only the beneficiaries named in the policy or their legal representatives have the right to file a claim on a life insurance policy.

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Infant deaths increased after Texas banned abortion in early pregnancy

By Annalisa Merelli June 24, 2024

S ince Texas’ ban on abortion went into effect, infant deaths in the state increased by nearly 13%, according to a new analysis published on Monday in JAMA Pediatrics . In the rest of the country, infant mortality increased less than 2% over the same period.

“We had read the literature that was showing an association [of infant death increases] with prior abortion restrictions or states that are hostile to abortion,” said lead author Alison Gemmill, a demographer and perinatal epidemiologist at Johns Hopkins Bloomberg School of Public Health. But they weren’t sure how strong the connection was.

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In order to establish the ban’s potential impact on infant mortality, the researchers looked at deaths that occurred starting in March 2022. Babies born in that month were about 10 to 14 weeks along when the Texas abortion ban — known as SB 8 — went into effect on Sept. 1, 2021. The ban, one of the most restrictive in the country, prohibits abortions after about six weeks of pregnancy.

The researchers found that in 2022, 2,240 infants under the age of 1 died in Texas, more than half of whom died before 28 days of life. In 2021, there were 1,985 infant deaths, a statistically significant difference.

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“I actually don’t think that it was obvious that there would be increases in infant deaths, and so just that there is itself an important finding,” said Amanda Jean Stevenson, a professor of sociology at the University of Colorado Boulder, whose work focuses on the impact of abortion and family planning policy. “There would be an argument to be made that we wouldn’t expect to see statistically significant increases, because this is such a rare outcome, and abortion had already been restricted in Texas pretty substantially,” said Stevenson, who was not involved in the study.

The findings, she said, show the huge impact that a restriction on abortion can have, even starting from low levels of access. Before SB 8 went into effect, abortion in Texas was essentially banned after 22 weeks, and the state imposed other restrictions, such as requiring hospital admitting privileges to provide an abortion and curtailing access for minors. “We think it’s actually a causal effect,” said Gemmill.

The study had limitations, including the fact that the gestational age was not included in infants’ death certificates. The low absolute number of deaths prevented more detailed demographic analyses, too. But the researchers focused on building apples-to-apples comparisons by accessing the same Centers for Disease Control and Prevention data for Texas and the rest of the country. They only included states where infant deaths exceeded 10 in any given month between 2018 and 2022, as data for smaller states didn’t provide the same level of granularity.

“Given the really substantial rigor that this article uses in its analysis, I am confident that this is something that happened exactly when SB 8 went into effect,” said Stevenson. “I think that it’s very strong evidence that SB 8 is the cause of the observed increase.”

Related: Hospitals largely keep quiet on maternal care since Dobbs, STAT survey finds

Among the causes of infant deaths, one increased the most: congenital abnormalities, which increased 22.9% in Texas in children between 2021 and 2022, while they decreased 2.9% in the rest of the country. That trend suggests that at least in some cases, parents were forced to carry a pregnancy to term while knowing their children had little to no chance of survival, said Gemmill.

“What we know from the literature is that any infant death is a traumatic event to experience,” she said. “But I can imagine that carrying that fetus to term when you could have had the option to terminate is going to just add that additional trauma and heartbreak to the situation.”

Significant increases were also found in babies who died because of maternal complications of pregnancy; in Texas, those deaths increased by 18.2% between 2021 and 2022, compared to 7.8% in the rest of the country. Infant deaths caused by unintentional injuries, which can be associated with unwanted pregnancies, also increased by 20.7%, compared to a 1.1% increase elsewhere in the U.S.

These numbers only paint a partial picture of the long-term impact of abortion bans, said Gemmill, who is planning to focus her research on infant morbidity. Babies born with congenital abnormalities can face extremely difficult life circumstances, and require immense practical and emotional investment from parents.

Deadly fatal abnormalities can’t be corrected through medical intervention, leaving the prevention of these deaths to policy. “The most effective way to prevent these unnecessary infant deaths is clearly to not restrict abortion,” said Stevenson. “The other thing that is possible is to support people leaving Texas and states that ban abortion to get abortion in other places. So there also is an opportunity for policy intervention in the form of facilitating people crossing state lines for care,” she said.

In the short term, Gemmill said, stronger support is needed for the families facing the loss of an infant. Stevenson agrees: “The grief that parents experience, the burden that caring for terminally ill infants places on families and health care providers — there are a lot of ways that our society doesn’t support people who are dealing with traumas like these.”

About the Author Reprints

Annalisa merelli.

General Assignment Reporter

Annalisa (Nalis) Merelli is a general assignment reporter at STAT. Her interests are ever-expanding, but she is especially drawn to the coverage of reproductive and maternal health, and their intersection with health equity.

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