Legal Definitions - blue note

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.