However, it must be kept in mind that a policy may contain a non-assignment clause, which will be enforced.
An example of the non-assignment clause is found in the 1994, Fort Worth Court of Appeals opinion, Texas Farmers Ins.
The insurer will assign your policy to the bank, so the bank becomes the owner of your policy and gets any pay-out. I hope that clears up how to assign a mortgage life insurance policy to a bank.
The insurer will send a confirmation of the assignment letter to the bank stating: “Thank you for your recent Notice of Assignment in respect of the above-numbered policy. It’s simple, no matter how difficult your bank may try to make it seem.
The lower court had held that the named beneficiary held a superior right to the life insurance policy.
This court got into a lengthy discussion citing other court opinions and eventually ruled as follows.Like other contract rights, the right to insurance proceeds can be assigned, giving the assignee the right to recover under the policy.This issue is discussed in the 1968, Texas Supreme Court opinion styled, Mc Allen State Bank v. Texas Bank claimed proceeds of a life insurance policy as successor to the named beneficiary asserting the policy was pledged as security for a loan made to the deceased.Also, it is clear from the language of the notes and from correspondence introduced into evidence that the policy was given to the bank to secure the note and that the bank was to have a lien on the policy for the payment of the debt.In view of these facts it is held that the life insurance policy in question was pledged to the bank. That clause read, “Your rights and duties under this policy may not be assigned without our written consent.” The court found this unambiguously precluded an assignment.If you haven’t been on the receiving end of an evidence ruling that makes you wonder whether the judge attended law school in a Winnebago, then I’m sorry, you may be a “practitioner,” but you’re not a real lawyer.On the other hand, corporate/transactional lawyers…er, practitioners…are way, way smarter than we litigators are.To make that crystal clear, your options are: They’re trying to scare you into buying their overpriced policy. Because you already know where you can get the best mortgage protection quotes. Otherwise, it’s a bit like two young fellas swearing loyalty by spitting into a handshake.You telling your bank about your existing policy is grand and all, but if anything happens, they want the legal papers to say they get any payout. When you die (no ‘ifs’ here, pal), your bank gets any pay-out.They have to understand things like complicated tax laws and how to structure complex commercial deals, which is generally far above our pay grade.Most of us became trial lawyers because we can’t do math.