Can Life Settlement Policies be used as collateral?
Assuming that you mean a life insurance policy being sold to a third party for more than the cash value, but less than the face value of the policy, generally a bank would not take such a policy if there is a risk of cancellation, nonpayment of premiums or anyone challenging the policy or transfer of ownership. Essentially, the assets value would be questionable and not a bankable asset. The health of the person not associated with the loan would determine the collateral value.
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Assuming that you mean a life insurance policy being sold to a third party for more than the cash value, but less than the face value of the policy, generally a bank would not take such a policy if there is a risk of cancellation, nonpayment of premiums or anyone challenging the policy or transfer of ownership. Essentially, the assets value would be questionable and not a bankable asset. The health of the person not associated with the 