What Does It Mean to Cede (Give Up) an Insurance Policy?
Ceding an insurance policy means transferring the benefits of your insurance policy to another person or institution — usually as security for a loan.
For example, if Corrie has a life insurance policy and needs a loan from Clever Bank, she can give up (cede) her policy benefits to the bank. The bank will then have the first right to the payout from the policy if she doesn’t repay the loan.
Does Corrie Still Own the Policy? Yes. Corrie remains the policyholder and is still responsible for paying the monthly premiums, even though the benefits have been ceded to the bank.
Does Corrie Still Own the Policy? Yes. Corrie remains the policyholder and is still responsible for paying the monthly premiums, even though the benefits have been ceded to the bank.
Will Corrie Lose Her Policy Benefits?
That depends on whether Corrie pays back the loan:
When Does the Bank Get Paid?
It depends on the terms of the policy:
Ceding a policy means using your insurance benefit as loan security.
You still own the policy and must pay the premiums.
You only lose benefits if you don’t repay the loan in full.
Once the loan is fully paid, the cession ends and the full benefit returns to you.
