Life Insurance Policy for a Bank Loan

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Life Insurance policy for a Bank Loan
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If you are a business owner requiring a loan for your business through your bank or Small Business Administration (SBA), you may be surprised when the loan officer, or lender, requires you to purchase a life insurance policy to cover the loan amount. It is not uncommon for the bank, or SBA, to require you to have a life insurance policy collaterally assigned to the bank, or SBA, to cover the loan amount.

If you need a life insurance policy quickly as a requirement for a bank or SBA loan, call us toll-free 888-777-7574 as we have a few companies that offer same day approval with no medical exam requirements.

What is Collateral Assignment Life Insurance?

Generally, when you purchase a life insurance policy you name a beneficiary that has an insurable interest to you the insured. This could be a spouse, family member or business partner.

When dealing with a life insurance policy for a bank loan, or SBA loan, it’s still the same concept. You will name your primary beneficiary, but the bank, or SBA, will be listed as the “collateral assignee”.

The collateral assignee basically becomes the primary beneficiary on the life insurance policy. If you pass away the bank will receive the balance of the loan from the death benefit and your primary beneficiary will receive the balance after the loan payoff.

Why is a Life Insurance Policy Required for a Bank Loan?

If the bank, or SBA, is requiring you to purchase a life insurance policy as terms of the loan agreement, it’s generally due to the size of the loan and the risk the bank is taking if you pass away unexpectedly. 

The life insurance policy ensures that the bank, or SBA, will receive the full balance of the loan.

Before the loan is issued, the bank will require proof that life insurance has been purchased and put inforce.

Recommended Life Insurance Coverage

There is not a special type of life insurance for a bank, or SBA, loan. However, there are policies that are more beneficial for this situation than others.

10 or 15 Year Term Life Insurance

Most collateral assignments we work with tend to be 10-15 year loans, making a simple term life insurance policy ideal coverage. Term is the cheapest form of coverage and will allow you to get higher death benefits at a cheaper cost than that of a permanent life insurance policy.

Our online quote form will allow you to compare both 10-year and 15-year rates for the cheapest coverage. Not to mention, all available companies are rated with a strong financial grade of A or better.

15, 20 or 30 Year Return of Premium

return of premium, or ROP, life insurance policy is another coverage option we like to recommend when dealing with collaterally assigned life insurance policies. 

At the end of your term contract, the life insurance company will send you a check for the full amount of premiums paid into the policy tax-free.

Most life insurance companies offer ROP policies in 20 and 30-year fixed premium lengths, but Prudential Life Insurance offers a 15-year return of premium policy if you need something shorter than 20 or 30-years.

No Medical Exam Term Life Insurance

If you need a life insurance policy quickly to secure a loan, there is always the no medical exam option. 

Going with a no medical exam term life insurance policy avoids having to schedule an exam date with an examiner saving on underwriting time. 

No medical exam term life insurance policies tend to cost a little more than traditional term, but they can be issued much quicker than a traditional term life insurance policy. 

Getting you Coverage Quickly

Top Quote Life Insurance has helped assist many business and small business owners secure their collaterally assigned life insurance for bank or SBA loans.

We always recommend that you give your lender, or loan officer, our contact info so we can work with them and help provide them with everything they need to get your loan issued as quickly as possible.

We understand that collaterally assigned life insurance policies need to get done quickly as your business can’t afford any delays in operating.

Life Insurance Policy for a Bank Loan

Top Quote Life Insurance provides the best in term and permanent life insurance rates from over 20 of the best life insurance companies in the business.

Feel free to run a comparison quote with the quote engine located to the right of this page or call us 888-777-7574 and we will get started securing you a life insurance policy for your loan.

Have questions? Send us a message below and will get right to work.

Jeffrey Manola

Jeffrey Manola

Jeffrey Manola is an experienced life insurance agent and the founder of Top Quote Life Insurance. His mission when he created Top Quote Life Insurance was to provide online consumers searching for life insurance with the absolute best quotes for term life insurance, permanent life insurance, no medical exam life insurance, and burial insurance.

Not only does he strive to provide you with the best rates for your life insurance coverage, but he also wants you to be well informed about the different types of life insurance options that are available. You will also find a significant amount of valuable information on the multiple life insurance companies that can provide you with coverage.

Jeffrey Manola is licensed to provide expert advice and help aid in the purchasing process of life insurance products. He is licensed with the National Insurance Producer Registry (NIPR) in the following states:

AL: 790866 AR: 14358927 AZ: 14358927 CA: 0K29801 CO: 531038 CT: 002536246 DC: 3000281706 DE: 3000190912 FL: W383615 GA: 3089339 HI: 482421 IA: 14358927 ID: 646048 IL: 14358927 IN: 3100885 KS: 14358927 KY: DOI-986908 LA: 758187 MA: 2045330 MD: 3000011601 ME: PRN252004 MI: 14358927 MN: 40427014 MO: 8428106 MS: 10519253 NC: 14358927 ND: 14358927 NE: 14358927 NH: 2434852 NJ: 1562332 NM: 14358927 NV: 3299018 NY: LB-1484031 OH: 1117369 OK: 100293583 OR: 14358927 PA: 740709 RI: 3000183893 SC: 14358927 TN: 2383399 TX: 1969337 UT: 648983 VA: 987464 VT: 3426230 WA: 947010 WI: 14358927 WV: 14358927

Never hesitate to reach out to Jeffrey if you need help. Top Quote Life Insurance is more than just an online quoting agency. We want to help you save money, protect your future, and earn your trust (888) 777-7574.

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