What to review first
Check the available death benefit, policy duration, ownership, beneficiaries and any existing assignment. A policy can have a large face amount but still not provide enough available protection for the lender’s condition.
Confirm lender and carrier requirements
Your lender needs to confirm it accepts the policy. The carrier must be able to process the required collateral assignment and any acknowledgement the lender requests.
Do not make changes too early
Do not cancel, reduce, replace or change the ownership of an existing policy until you understand the loan condition and the effect on the policy’s original purpose. After loan payoff, request and confirm an assignment release.
Read SBA collateral assignment of life insurance for the documentation process.