It’s a simple process to assign the death benefit in your life insurance as collateral: >You have a life insurance policy that you pay for and you are the named insured on the policy. >You will apply for the collateral assignment with your insurance company and the lender who is asking for it. >When your insurance company has approved the assignment of your death benefit, you should notify the lender and provide written proof of the collateral assignment.  This is usually handled by the insurance company.