Which of the following policies can be used as security for a loan?

A. key-man policy
B. endowment policy
C. term insurance policy
D. whole life insurance

Correct Answer: Option C

C. term insurance policy

Explanation

A collateral assignment of life insurance is a conditional assignment appointing a lender as the primary beneficiary of a death benefit to use as collateral for a loan. If the borrower is unable to pay, the lender can cash in the life insurance policy and recover what is owed.