Which statement about collateral assignment is true?

• A. Ownership is transferred to lender
• B. Ownership remains with policyowner
• C. The policy is surrendered
• D. It ends the policy

Answer: (B)

Collateral assignment keeps the policyowner in charge of the policy while the lender simply gains a secured interest to back a loan. The lender does not take ownership; rather, the owner retains ownership and day-to-day control, with the loan secured by a lien on the policy’s cash value and death benefit to the extent needed to secure repayment. The policy itself remains in force as long as premiums are paid, and the arrangement ends only when the loan is repaid or the lien is released. If the insured dies before the loan is repaid, the death benefit is used to satisfy the loan first, with any remaining proceeds going to the beneficiaries. So the correct statement is that ownership remains with the policyowner. This isn’t about transferring ownership, surrendering the policy, or ending it.