Introduction
Most people think life insurance only matters when someone passes—but smart families and business owners are using it as a living strategy.
One little-known tool is collateral assignment — and it’s helping people unlock financial flexibility without cashing out or giving up protection.
What Is Collateral Assignment?
Collateral assignment is a simple agreement between you and a lender:
You pledge your life insurance policy as collateral for a loan.
If something happens to you before the loan is paid off, the lender receives the amount owed from your policy’s death benefit — and the remaining funds go to your beneficiary.
It’s not a loan from the life insurance company.
It doesn’t cancel your policy or change your beneficiary.
Why People Use It
This strategy is useful in many real-life situations, such as:
- Securing a business or personal loan
- Funding a buy-sell agreement between business partners
- Avoiding early withdrawal from retirement or savings
- Improving credibility when applying for financing
The Power of Permanent Life Insurance
Collateral assignment works best with permanent life insurance, such as whole or universal life. These policies build cash value, which you may still access while the policy is pledged.
This gives you added flexibility — your insurance works for you while you’re alive, not just after.
In Summary
Collateral assignment turns your life insurance into a financial tool — helping you secure funding while maintaining long-term protection.
It’s a smart move if you’re:
- A business owner
- Applying for financing
- Managing wealth for long-term planning
Want to Explore If This Works for You?
Schedule a free, no-pressure consultation.
Let’s talk about how your life insurance can do more.