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Simple English definitions for legal terms
blue note
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A quick definition of blue note:
Blue note is a type of note that keeps a life insurance policy active until the note is due. It is a promise to pay money to someone else, like a written IOU. There are many different types of notes, like ones that require small payments over time and a big payment at the end, or ones that are backed by property as collateral. A note can also be a short essay written by a law student about a specific area of the law.A more thorough explanation:
A blue note is a type of promissory note that maintains a life-insurance policy in effect until the note becomes due. This means that the life-insurance policy will remain active until the note is paid off.
For example, if John takes out a blue note for $10,000 and uses his life-insurance policy as collateral, the policy will remain active until John pays off the $10,000 note. If John were to pass away before paying off the note, the insurance policy would be used to pay off the remaining balance.
Blue notes are commonly used in estate planning to provide a source of funds for beneficiaries in case of the borrower's death.