Can I use my life insurance policy as a collateral security for loan liability?

Can I use my life insurance policy as a collateral security for loan liability?

Rishi Mehta, Pune

Yes, life insurance policy can be used as collateral. Generally, this is done through assignment of the policy, which means that the title, rights and benefits of a policy to the policyholder are legally transferred to another person or entity. In this case, you can assign the policy in the name of the entity that is giving you the loan, thereby pledging the policy with the loan provider. 

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