Can Life Insurance Be Used As Collateral For A Loan? 
My colleagues have handled this pretty well actually . As has been said , there are a couple of factors and ways that Life Insurance may be used as collateral for a loan . The most common requiers the policy to be some form of permanent Life Insurance with a reportable cash value . These types of policies are certainly considered when a commercial banking institution is measuring one 's net worth and underwriting a loan application just as bank accounts or other investment holdings . However , if the loan is for business purposes , for example , if a contractor is purchasing a major piece of equipment , a condition of the loan may be the purchase of even a short term Life policy which would then be collaterally assigned to the lending institution . 