What is considered sufficient collateral to bind the loan?
A. In all cases, the lender will require the borrower to assign the policy as collateral and, if needed, will require additional collateral in the form of cash, cash equivalent, marketable securities, or a letter of credit from a bank approved by the lender. Interests in closely held businesses and real estate are not acceptable collateral. At the time the policy cash values exceed the loan balance, the lender may begin to release the additional collateral consistent with the lender’s loan policy. The borrower will be responsible for maintaining adequate collateral throughout the life of the loan.
