Pledge of Life Insurance Policy to A Creditor
A pledge is something that is given as security for the fulfillment of a contract or the payment of a debt. Once failed to accomplish or failure to abide by the terms stated in the pledge, it is liable for forfeiture, in this case, an insurance policy. On the other hand, insurance policies are offered by an insurance company to the policyholder that determines the claims that is legally required to pay by the insurer.
A pledge of life insurance policy to the creditor secures the creditor’s interest in the event of death or other unfortunate events by the principal. Thus, it is a legal document that ensures the amount/asset that is to be taken into account by the creditor.
The name of both the debtor and the creditor must be stated in the document so as to signify that both parties agreed on the terms and conditions that is also to be included in the text. It would also have to include the amount that was indebted to the creditor and along with it is the life insurance policy number of which the debtor assigned to the creditor. The amount of loans/charges against the policy must also be present as a declaration of collateral for the debt, to secure repayment of a loan. The pledge is then concluded by the debtor’s name and signature and the Insurance Policy Number right after the date the agreement was done. To follow is the authorization from the creditor’s side.
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______________, referred to as DEBTOR, and __________, referred to as CREDITOR, agree:______________ is indebted to CREDITOR in the amount of $_____(_________________________&___/100 dollars) by virtue of _________________ dated ____________. DEBTOR assigns to CREDITOR the following policy of life insurance:
Policy number: _______________________________________
Face amount: $_____(_______________________&____/100 dollars)
Amount of loans/charges against policy: $_____(__________________&____/100 dollars)
as collateral for the debt.Any and all proceeds from the policy are assigned to the CREDITOR, to the extent of principal and interest due upon the debt, and any renewals and extensions thereof. The DEBTOR shall prepare any further instruments required to effect this pledge.
Dated: _________________________
____________________________________________
Debtor
Insurance Policy Number:_____________________________________________
___________________, by an authorized officer of Creditor
Pledge of Life Insurance Policy to a Creditor
Review ListThis review list is provided to inform you about this document in question and assist you in its preparation. A pledge of life insurance proceeds is a common request by major creditors including financial institutions buying stock from the Company. It secures their interest should a key principal die.
