The Possession of Policy is a document that indicates:
- Insured’s name
- Insurance company name and address
- Policy number
- Beneficiary name
- Amount of insurance coverage
Obtain this document from the borrower when the loan is secured by:
- Premium (death benefit) value of a life insurance policy
- Cash Surrender value of a life insurance policy
- Single Payment Annuity
Things to Consider
- Premium payments should be monitored to make sure they are being made.
- Why?
- Many policies include a provision where premiums are automatically paid from the cash value of the policy if the owner of the policy does not make the premium payments. This would reduce the value of the collateral.
- Why?
- Type of Policy
- Why?
-
Term Policy
- Has no cash surrender value
- Can collect only upon death of the borrower
- Has an expiration date. The loan maturity must not exceed expiration
- May not be renewable
- Level or decreasing policy
- Level will pay face amount upon death
- Decreasing payout is less as the term progresses, therefore decreasing collateral value
-
Cash Value or Permanent Life Policy
- Has a cash surrender value
- Renewable
- Cash value increases over time
- Types of policies that fall into this category are:
- whole life
- Single premium life
- Universal life
- Variable life
- Variable universal life
-
Single Payment Annuity
- Investment vehicle rather than life insurance policy
- No death benefits
- Insured receives a regular (for example: monthly) payment
-
Term Policy
- Why?
Upload a copy of policy specifics (Owner/Beneficiary/$) to Synergy (Consumer Purpose) or Abrigo (Business Purpose).
Once completed, the Possession of Policy document is uploaded to Synergy (consumer purpose) or Abrigo (business purpose).
If you need additional assistance with Abrigo, please contact _Abrigo Help.
After loan has closed: Original Policy, Assignment of Life Insurance Policy as Collateral, and Collateral Receipt must be sent to Loan Servicing in the secure locked blue bag.