- 20 Marks
LPB – APR 2016 – L3 – Q5 – Bank’s Position on Assignment of Term Life Policy as Security
Discuss bank's position on legal assignment of a term life policy as additional security for a mortgage, how assignment is taken and priority over subsequent assignments, effect if premiums stop, payout if suicide, and differences if endowment policy.
Question
The PREDEQ bank gives a mortgage of land for a customer0 \mathrm{}$ and, as an additional security, took an assignment of a 30-year Term Life Policy (not endowment situation) over the customer’s life – the policy monies being payable to the customer’s wife, at maturity on his death. Discuss this bank’s position in the following circumstances:
(a) How the Legal Assignment of the Policy was taken by the PREDEQ Bank: Supposing that someone else, at a later date, also takes an assignment of the Policy, which of the 2 assignments would have priority over the other?
(b) What would happen to the PREDEQ Bank’s security if the customer stopped paying the premiums?
(c) Would the Policy monies be payable if the customer committed suicide?
(d) Will the position be any different of the Policy was an Endowment Life Policy? If yes, indicate
Find Related Questions by Tags, levels, etc.
- Tags: Assignment, Banking Advances, Endowment, Life Policies, Premiums, Priority, Security, Suicide, Term Life
- Level: Level 2
- Topic: Life policies, Securities Acceptable to Bankers
- Series: APRIL 2016
