Pledges of insurance policies

1. Assignment of debt (Article 1275 et seq. of the Luxembourg Civil Code).

2. Pledge (Article 116 et seq. of the amended Luxembourg Law of 27 July 1997 on Insurance Policies, and Articles 2071 et seq. of the Luxembourg Civil Code).

3. Assignment of rights (Articles 118 et seq. of the Amended Law of 27 July 1997 on Insurance Policies).

1. Assignment of debt: a legal transaction by which one person (the assignee) undertakes to comply with the instructions of another person (the assignor) towards a third person (the delegatee). 
A triangular transaction consisting in an initiative by the assignor, a commitment by the assignee and an acceptance by the delegatee (or by other parties, such as the insured, if he is not the same person as the subscriber).

2. Pledge: the rights arising under a policy may only be pledged by the policyholder. This type of security consists in the subscriber delivering the policy to the creditor as guarantee for his debt. The policy may only be pledged by an additional clause signed by the policyholder or debtor, the pledgor, and the insurer. 

3. Assignment of rights: the rights arising under an insurance policy may be assigned, in whole or in part, by the policyholder. Total or partial assignment may only be made by means of a tripartite amendment between the insurance company, the policyholder and the secured creditor. There are three types of assignment: transfers of full ownership, transfers up to the sums due, and transfers of all the rights arising under a policy.

1. Assignment of debt (governed by Articles 1336 et seq. of the French Civil Code).

2. Pledge (Article L132-10 of the French Insurance Code and Articles 2355 et seq. of the French Civil Code).

1. Assignment of debt: a legal transaction by which one person (the assignee) undertakes to comply with the instructions of another person (the assignor) towards a third person (the delegatee). 
A triangular transaction consisting in an initiative by the assignor, a commitment by the assignee and an acceptance by the delegatee (or by other parties, such as the insured, if he is not the same person as the subscriber).

2. Pledge: the assignment, as security for a debt, of an intangible asset or a set of intangible assets, present or future. An insurance policy may be pledged either by amendment or by deed subject to the formalities required by Articles 2355 to 2366 of the Civil Code.

1. Assignment of claim
A Luxembourg mechanism, not provided for in Belgian law, but often used in practice. 

2. Pledge (= Charge)
Articles 181 and 182 the Law of 4 April 2014.

3. Assignment of rights 
Articles 183 and 184 of the Law of 2014.

1. Assignment of debt: for a policyholder: right to claim (=  debt of the insurance company) - tripartite agreement. Belgian law does not provide for any formalities.

2. Pledge: Art. 181. The rights resulting from the insurance policy may be pledged;only by the policyholder, to the exclusion of his spouse and his creditors. If accepted, the pledge is subject to the consent of the beneficiary.
Art. 182. A policy may only be pledged by an amendment signed by the policyholder, the pledgor, and the insurer.
A collateral is an endorsement on the insurance policy and therefore the insurance company is party to the agreement. The law applicable to the insurance policy will also be applicable to the charge.

3. Assignment of rights: 
Article 183. The rights resulting from the insurance policy may be assigned in whole or in part by the policyholder. This right of assignment may not be exercised either by his spouse or by his creditors.
Article 184. The transfer of all or part of the rights resulting from the policy may only be made by an amendment signed by the transferor, the transferee and the insurer.
An assignment (transfer) of all or part of the rights is possible, to one or many persons.

In Italian law, this is called a “pegno". This is a type of security similar to a “charge" (Articles 2787 and 2800 of the Italian Civil Code).

The bank and the policyholder sign a pledge and notify the insurance company. The company makes an annex to the contract, notifies and delivers it to the client and to the bank.

1. Pledge

2. Assignment of Rights

1. Pledge: The policyholder (or “pledgor") delivers the policy, which is a bearer instrument, to the creditor (or “pledgee").

2. Assignment of Rights: The policyholder (or “assignor") assigns his policy rights to a third party, usually the creditor (or “assignee").

Pledge

The agreement setting up the pledge should be made in writing with a certified date, even though it is not necessary to comply with this formality when transferring a right. For a pledge to be set up, the pledgor (policy holder) must give written notification to the debtor of the receivable (the insurance company).

Pledge

In order that an assignment of a life insurance policy to a lending institution may be recognised, the following conditions must be met: 
(1) the party providing the life insurance must be subject to the Solvency II Directive, or subject to supervision by a competent authority in a third country which applies supervisory and regulatory arrangements at least equivalent to those applied in the European Community; 
(2) the life insurance policy must be openly pledged or assigned to the credit institution; 
(3) the life insurance company must be notified of the pledge or assignment and, as a result, may not pay amounts due under the policy without the consent of the credit institution; 
(4) the surrender value must be declared by the life insurance company and cannot be reduced; 
(4a) the surrender value must be paid in a timely manner when requested;
(4b) the surrender value may not be requested without the consent of the credit institution; 
(5) the credit institution must have the right to cancel the policy and receive the surrender value in a timely manner in the event of default by the borrower; 
(6) the credit institution must be informed of any failure by the policyholder to make payments under the policy; 
(7) the credit protection must extend up to the repayment of the loan. Where this is not possible because the insurance relationship ends before the loan relationship expires, the credit institution must ensure that the sum due under the insurance policy serves as security for the credit institution until the end of the term of the loan agreement; 
(8) the pledge or assignment must be legally effective and enforceable in all jurisdictions which are relevant at the time of the signature of the loan agreement.

In Spanish law, this is called a "Pignoración de la póliza". This is a type of security similar to a "pledge".

Where the pledge is intended to constitute a privilege over the insurance policy, and therefore, the mere possibility of transfer if the primary obligation is not honoured...
This is a pledge of rights (all the rights necessary for the pledgee to be able to enforce its rights).  Under these agreements only the client and the bank may intervene. The company should only be informed about this agreement in writing and by reliable means.

1. A ‘pandrecht' is based on Articles 3:236 and 3:237 of the Burgerlijk Wetboek (the Dutch Civil Code). A pledge of rights is a document which must be registered or established by a notary. 

1. Assignment of claim (a Luxembourg mechanism, not provided for in Portuguese law but often used in practice).

2. Pledge (penhor - Article 666 of the Portugese Civil Code.

3. Assignment of a right (an assignment of or encumbrance on the rights under Art. 196 of the Portuguese Insurance Law and Art. 577 of the Portuguese Civil Code).

1. Assignment of debt: for a policyholder, this means his right to claim (= a debt of the insurance company) - tripartite agreement.

2. A pledge entitles the creditor to payment of his claim, plus interest if any, with preference over other creditors, by applying the value of a certain movable asset, belonging to the debtor or to a third party. The pledge is an agreement between the policyholder and the bank, so the insurance company only has to be notified.

3. The right to surrender or any other right of the policyholder, the insured or the beneficiary, may be assigned or charged in accordance with the general rules, and must be notified to the life insurance company.

The policyholder and the pledgee sign a pledge and must notify the life insurance company. The company makes an annex to the contract, notifies and sends them to the policyholder and the pledgee.

1. Assignment of claim 

2. Charge or Pledge

1. Assignment of debt: legal transaction by which one person (the assignee) undertakes to comply with the instructions of another person (the assignor) towards a third person (the delegatee). It is triangular transaction consisting in an act made by the assignor, a commitment by the assignee, and an acceptance by the delegatee (or by other parties, such as the insured, if he is not the same person as the subscriber).

2. Charge or Pledge: the assignment, as security for an obligation, of an intangible personal asset or a group of intangible personal assets, present or future.