DEFINITION of 'Assignment Of Proceeds'
Assignment of proceeds occurs when a document transfers all or part of the proceeds from a letter of credit to a third party beneficiary. A letter of credit is often used to guarantee payment of a loan or other obligation. The person who is entitled to receive those proceeds can choose to have them delivered to a third party - this is an assignment of proceeds. To receive an assignment of proceeds, the original beneficiary of the letter of credit will need to submit a request to the bank or other entity issuing the letter of credit asking to assign the funds to a different person or company.
BREAKING DOWN 'Assignment Of Proceeds'
The assignment of proceeds will need to be approved once it is submitted. Once approved, the bank or other entity will release the money to the specified party, pending fulfillment of any requirements set forth in the letter of credit. However, if the principal party does not meet the obligations outlined in the letter of credit, no assignment will take place. Samples of assignment of proceeds letters can be found on the internet. Assigning the proceeds from a letter of credit can be utilized in many types of scenarios, such as to pay suppliers or vendors in a business transaction or settle other debts.
Are you looking for a way to secure a loan, but do not have the credit rating or typical collateral in order to do so?
Then you might want to consider the assignment of life insurance policy as collateral for a loan.
This relatively new field in the obtainment of loans uses your own life insurance policy as the means for you to obtain the type of loan you want.
The collateral assignment of life insurance policy proceeds is a relatively simple one, but there are a few steps that need to be taken before you can take full advantage of this method.
Please note:You first must find a lender that will be willing to accept your life insurance as collateral. We do not do that. If you identify a lender that will, we can assist you in purchasing the most the affordable life insurance policy and completing the collateral assignment paperwork.
Finding Insurance Companies That Allows Collateral Assignment
The first question before the assignment of life insurance policy as collateral for loan can be processed is whether your life insurance company will allow it to happen. Many of them do have specific requirements and they need to be followed for the collateral assignment of life insurance policy can take place.
If the answer is no, at least you can eliminate that method to obtaining your loan and in the future obtain a life insurance policy that will not have these restrictions.
Most of the insurance carriers that we work with do allow for collateral assignment of your policy so as long as you identify a lender that will accept it.
There are companies out there that specialize in working with both lenders and life insurance companies that can help you obtain the goal of collateral assignment of life insurance policy for the purposes of getting a loan. In most cases, they follow a step-by-step approach that starts with contacting the lender to see what type of life insurance qualifies as collateral. The company will insure getting the exact wording necessary so that the next step can be taken.
Now you apply for the life insurance that qualifies for the loan, in some cases it may not need a medical exam which generally is more expensive but can be done in a few days or it may require an exam and be fully underwritten which is less expensive, but takes a few weeks. If you currently have a policy that qualifies for assignment of life insurance policy as collateral for loan, then this step can be avoided.
If you are in need of a quick option and are in overall good health, there are guaranteed acceptance insurance policies and simplified issued policies that require little to no medical exams and are issued rather quick.
Lender Accepting The Insurance Policy Proceeds As Collateral
The lender will now accept the life insurance as collateral for your loan, usually they are consulted beforehand to insure that all the wording and legal language requirements are met and that the application is essentially approved before it is sent in to avoid any unwanted surprises.
Once it is approved, then the forms are signed by both the lender and the life insurance company so that the process can take the final step of providing you with the loan that you need.
Sample Collateral Assignment Form
This rather straightforward process can be quite technical in nature and needs an experienced, knowledgeable company to make the transaction work so that you can get the loan you desire while satisfying the needs of both the lender and the life insurance company. This way, all the potential problems are ironed out beforehand and you get the loan you want.
If you are looking for another method to obtaining a loan, then using your life insurance policy proceeds or having one drawn up can be the way to get what you need.
Collateral Assignment Example
We recently had a client that was a real estate developer and needed to secure a $4 million term life policy to cover his bank loans. He was needing to get his life insurance fast, so we went with the carrier we felt would issue the quickest based on his situation.
Within 4 weeks the policy was in-force and he was completing the collateral assignment forms to hand over to his banks. Keep in mind that the assignment forms do not need to be completed until after you receive your policy from the insurance company.
Sample form: Collateral Assignment
Life Insurance For Your Family
The idea of using a life insurance policy as collateral is a relatively no idea. These plans are an excellent way to secure a loan that you wouldn’t be able to get otherwise. One thing to always be aware of is the life insurance protection that you’re giving your loved ones. Life insurance plans are a great way to close a loan, but the primary use for any life insurance policy should be to give your family members the money that they need if something tragic were to happen to you.
Thankfully, there are plenty of affordable life insurance policies that you can choose from, both for loan purposes or for protection for your family. If you’re looking to get the most affordable insurance policy, your best bet is going to be a term life insurance plan. As you probably know, these plans are bought with a pre-determined expiration date attached to them. After that date has passed, you’ll have to reapply for coverage. Because they aren’t a permanent form of coverage, they are going to be much more affordable than other options for life insurance.
Additionally, there are a few things that you can do to help secure the lowest premiums available. Before the insurance company approves your application, they are going to require that you complete a medical exam. The medical exam will give them an idea of what your overall health is and how much risk you are to insure with a life insurance plan. The better results that you get from the medical exam, the lower that your insurance rates are going to be.
If you want to save money on your insurance premiums, you’ll need to start getting regular exercise and stick to a healthy diet. Both of these can help you lose any extra weight, lower your cholesterol, and reduce your risk of having severe health complications later in life. It’s time to dust off your old tennis shoes and start hitting the gym. Your doctor and your wallet will both thank you.
Another way that you can get the lowest insurance rates is to eliminate any tobacco that you currently use. If you’re a smoker, you can expect to pay much higher rates on your premiums. In fact, smokers are going to pay twice as much for life insurance versus what a non-smoker is going to pay for the same amount of life insurance protection. If you want to get the most affordable plan, either for a loan or for traditional reasons, you’ll need to kick the bad habit once and for all.
If you have any questions about life insurance as collateral or about getting the most affordable coverage, please contact me today. I would be happy to answer those questions and ensure that you’re getting the best policy to meet your needs. Don’t wait any longer to get the life insurance protection that your loved ones need.