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How works the pledging a life insurance contract in the context of operations on the contract

By - Content Strategy Manager - Bâloise Vie International

A life insurance policy can be pledged by the policyholder. It’s an agreement between the policyholder, the creditor (bank) and the life insurance company, whereby the life insurance contract is used as guarantee in exchange for a financial loan.
There are different types of collateral, the most common ones – assignment of debt and pledge - are described below.

Assignment of debt

Collateral / Pledge

How works the pledge in the context of a surrender request from the policyholder.

When a life insurance contract has been pledged, the policyholder can no longer act freely during management acts such as a switch or a surrender. He must request prior authorisation to the creditor (banking institution).