Who has the authority to assign a life insurance policy as collateral for a loan?

The policy owner holds the authority to assign a life insurance policy as collateral for a loan because they have the legal rights and responsibilities associated with the policy. This includes the ability to make decisions regarding the policy, including its assignment to secure a loan.

When a policy owner assigns their life insurance policy as collateral, they are typically doing so to obtain financing while still retaining ownership of the policy. It allows the lender to have a claim against the policy’s death benefit in the event of default on the loan.

The other parties listed—such as the insurance company, the beneficiary, and the insured—do not possess the same rights as the policy owner regarding this type of assignment. The insurance company administers the policy but does not have authority over how the policy owner chooses to use it. The beneficiary is designated to receive the death benefit when the insured passes away but cannot assign the policy without the policy owner's consent. The insured, who is the person covered by the policy, may or may not be the policy owner and, therefore, lacks the right to make such assignments unless they are also the owner.