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LIFE POLICIES AS SECURITY (Main security conditions (Place where monies…
LIFE POLICIES AS SECURITY
With Profits policies
Also known as 'Participating policies'
Premium is higher
Capital sum + profits
The profits known as bonuses. Also, reversionary bonuses.
Bonuses being added, Surrender value greater
Without profits policies
Also known as 'Non-participating policies'
Premium is lower
Capital sum only
Surrender value lower
Capital value
- upon death of life assured/ when policy matures
Surrender value
- aft 2-3yrs of issue. (Increase w payment of add. premium)
Paid up policies
- no further premium aft converting.Policy must be > 3 yrs
EXAMPLES OF LIFE INSURANCE POLICIES
Endowment policies
capital sum at fixed future date/ upon death
w/ profits (or bonuses)
Higher premiums for higher profits
With profits, useful form of banking security
Whole Life policies
Only upon death/ a certain age
with or without profits
acquire Surrender value but lower than endowment
Less useful for S/T bank lending
BENEFITS
1) Financial Security 2) Act as Savings medium 3)Interest in policy to be assigned to 3rd party (bank)
Main security conditions
Uberrimae Fidei
- can be voided
Insurable Interest
- relationship/ subject matter
Beneficiaries
Age
Minor as beneficiaries
- not considered acceptable as security
Place where monies are payable & currency of proceeds
Exchange rate risk
Exchange control regulations
Premiums
Any assignable interest?
Legal Assignment
& Legal Assignee
Equitable assignment
& Equitable assignee
Simple & Strong form