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Assignments under Hong Kong life insurance plans happen in two ways.The first way a policy can be assigned is for it to be an , where the transfer is temporary and the policy is normally used as security for a loan which was not provided by the insurance company.This means that, in the event of a Beneficiary being named an Irrevocable Beneficiary they would not be removed from the policy.
In the event of the borrower's death before the loan's repayment, the lender receives the amount owed through the death benefit, and the remaining balance is then directed to other listed beneficiaries.
The borrower must be the owner of the policy, but not necessarily the insured, and the policy must remain current for the life of the loan with the owner continuing to pay all necessary premiums.
If the loan is repaid before the borrower's death, the assignment is removed, and the lender is no longer the beneficiary of the death benefit.
Insurance companies must be notified of the collateral assignment of a policy; other than their obligation to meet the terms of the contract, they remain disinterested in the agreement.
As such, the policyholder (assignor) is entitled to sell his plan to a third party, who would become the assignee and receive all benefits of being the new policyholder.
Not all assignments require a sale, in some cases a policyholder may gift his policy to another party.
In the event that you have any additional questions about Life Insurance Assignments and Transfers under a Hong Kong Life Insurance plan, please Contact Us to speak with an expert advisor today!
A collateral assignment of life insurance is a conditional assignment appointing a lender as the primary beneficiary of a death benefit to use as collateral for a loan.
Any type of life insurance policy is acceptable for collateral assignment, provided the insurance company allows assignment for the policy.
A permanent life insurance policy with a cash value allows the lender access to the cash value to use as loan payment if the borrower defaults.