Collateral Borrower
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.
Popular Insurance Terms
State that increases the probability of a loss. For example, storage of flammable material next to a furnace in one's home increases the hazard with the knowledge of an insured, and is ...
Additional Living Expense Insurance is a type of coverage present on several types of Homeowner’s Insurance that reimburses additional costs caused because of the insured’s ...
Property coverage for a builder of ships until possession passes to the owners. Protects against pre-launch and post-launch perils. Coverage can be purchased on an all risks basis subject ...
Program through which employees purchase individual life insurance and disability income insurance by having the employer reduce their income by the required insurance premium. Since the ...
Practice in which no funds are set aside on a mathematical basis to pay for expected losses. This occurs when a risk manager is not aware of an exposure, when the cost of treating an ...
Frequency of premium payment; for example annually, semiannually, quarterly, or monthly. ...
Measure of the sensitivity of the insurance company's liability for the resultant higher expense rates than charged for in the premium. ...
Temporary insurance contract providing coverage until a permanent policy is issued. In property and casualty insurance, some agents have authority to bind the insurance company to cover ...
Insurance issued to a creditor (lender) to cover the life of a debtor (borrower) for an outstanding loan. If the debtor dies prior to repayment of the debt, the policy will pay off the ...
Have a question or comment?
We're here to help.