Can Term Life Insurance Be Used As Collateral For A Loan? 
Collateral is an asset that you own that has value and the lender is accepting in order to provide you a loan . Term life insurance hasnt any value . A collateral assignment is an additional item to induce a lender to make a loan and term life insurance can be used in this case . The term policy is assigned to the lender who has the first right over the proceeds in the event of death . This way the lender will get his money whether the assets that collateralized the loans are adequate or not . Incidentally , permanent insurance can be used as collateral because it has value . 