GK
INSURANCE AWARENESS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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To use life insurance policy benefits as collateral for a loan is called ____
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Paid-up value
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Maturity Claim
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Surrender Value
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Collateral Assignment
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Explanation:
Detailed explanation-1: -Example of Collateral Assignment of Life Insurance 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.
Detailed explanation-2: -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.
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