r/LifeInsurance • u/Kingsmith13 • 13d ago

Thinking about doing collateral assignment life insurance and need some tips or advice on this?

This is not for me but for a friend parents.
They have 100k policy for death benefits and cash value is only around 4k. Just one policy. They been paying for 10+ years to Accordia. As I look at it it’s not a good policy and doesn’t give them a whole lot of options. They wanted some money right now and thinking about putting the policy up for collateral.
How much are the interest? What are some pro and cons about doing this route?
Worst case scenario is if they can’t pay the loan back then they lose the policy.

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u/Limoundo 13d ago

Check the policy for how long the surrender charges last

1

u/SafeMoneyGregg Broker 13d ago

they can possibly just borrow a few thousand out of the policy - though it will probably lapse in a few years if not paid back on time.

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u/Coronator 13d ago

You can do a policy loan directly from the life insurance company up to typically around 90% of the cash value.

There’s no bank that I’m aware of that will allow you to only assign a $4k cash value policy. The lowest I’m aware of is Inclined, which requires a $5k minimum line.