Perfecting A Security Interest In A Life Insurance Policy

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Question:

What are the requirements to perfect a security interest in a life insurance policy? We are going to get an Assignment/Acknowledgment from the insurance company, but do we need to file a UCC-1 on the policy itself?

Answer:

Filing a financing statement on the policy is not required. Revised Article 9 does not apply to security interests in life insurance policies. See Revised Art. 9, Section 9-109(d)(8). The security interest in the policy is perfected by filing the assignment with the insurance company. OCU Law Professor Alvin Harrell, in his book "The Law of Personal Property Secured Transactions," suggests that "it may also be desirable to obtain possession of the policy itself."

First published on BankersOnline.com 07/07/03