ARSD 20:07:18:04. Limitations on purchase of life insurance on borrowers

The purchase of cash value life insurance on borrowers by a bank is subject to the following limitations: (1) The face value of the life insurance policy may not exceed the borrower's obligation to the bank; and (2) A second beneficiary shall be named by the borrower who, if the borrower dies, shall receive any amount in excess of the obligations to the bank because of the repayment of the debt to the bank.