Definition of "Collateral borrower"

Kathy Foran real estate agent

Written by

Kathy Foranelite badge icon

Realty Executives

Individual who assigns rights to a benefit. For example, a life insurance policy may be assigned as security for a loan made by the borrower. The policy protects the collateral creditor (assignee) if the borrower does not pay the loan when due. If a loan remains unpaid at the death of an insured, the loan balance is subtracted from the death benefit and paid to the creditor, with the balance going to the insured's beneficiary. On the other hand, if the insured (the borrower) does not pay the loan when due, the creditor can withdraw the amount due from the cash value of the policy. When a loan is repaid, the assignment ends and the policy owner is again vested with all rights to the policy.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Insurance Terms

State plans that provide health insurance coverage for those who are unable to purchase medical insurance. Coverage is provided by a specially formed nonprofit-making pool comprised of all ...

Maximum sum of money that the insurance company will pay, during the time interval that the product liability insurance coverage is in effect, for all product liability-related claims ...

Standard property/casualty insurance premium set by a state rating bureau. States have responsibility for regulating insurers and making certain that rates are reasonable. To this end, ...

Account established by the insurance company specifically for beneficiaries of a life insurance policy where the beneficiary has the choice of leaving the death benefit on deposit in the ...

Case where an insurance company is placed by the state court under the control of the state insurance department. Claims are paid in the order filed until the insurance company's ability to ...

Health plans established by associations of hospitals and physicians to provide hospital service and care, and medical and surgical care. ...

Nominal interest rate minus the rate of inflation. ...

Statistical approach stating that if a series of samples is taken from a stable population, the distribution of the means (averages) of these samples will form a normal distribution whose ...

Apparent agreement that is not a valid contract. ...

Popular Insurance Questions