A life insurance collateral assignment will protect a lender from financial harm in the event a borrower passes away before the loan is paid off. Most SBA loans require you to purchase a life insurance policy and process a collateral assignment.
An experienced Root Financial life insurance agent can make this process fast and easy for you. Here are the simple steps:
We contact your lender to determine the specific terms of the life insurance collateral assignment required. We need to know the EXACT wording and amount required on the collateral assignment.- Apply for a term life insurance policy. Depending on when you need it, we’ll decide if a no-medical exam policy is appropriate (approved within days, but more expensive) or if we can rush a fully underwritten policy (approved in 4-6 weeks, least expensive option). Also - you can assign a current life insurance policy if it meets the lender’s requirements.
- Process the appropriate collateral assignment form. Almost every lender will accept the life insurance company’s collateral assignment form, however it’s always smart to consult the lender to verify the form and wording used in the life insurance company’s collateral assignment form is ok. We don’t want any surprises at the end. We’ll take care of this for you.
- Finalize the life insurance collateral asssignment form. Once the policy is approved, the form is signed by the lender and the insured - then finally sent back to the life insurance company for signature and completed copy will be sent back to the lender.
While it may sound easy, it’s actually very technical. It’s important that you work with an experienced, independent life insurance agent who is familiar with the life insurance collateral assignment process or you’ll be in for a lot of headaches along the way.