Question

An individual borrowed money at the bank to send his daughter to college. Instead of purchasing Credit life insurance, he used an existing life insurance policy to secure the debt. This would be called a ___________

Answer 1

The correct answer is: Collateral Assignment.

Step-by-step explanation:

Collateral assignment of a life insurance sets a lender as the beneficiary in front of the decease of the insured, so the benefits will be used to cover the debt of that loan. The lender could be the insured of the life insurance or anybody else the insured decides to appoint.