What is an absolute assignment in life insurance?

An absolute assignment in life insurance refers to the complete transfer of all ownership rights and interests in a life insurance policy from one party to another. This means that the original owner relinquishes all control and benefits associated with the policy to the new owner. The new owner then has full authority over the policy, which includes rights to change beneficiaries, make premium payments, and ultimately collect the death benefits upon the insured’s passing.

This concept is crucial in various scenarios, such as when a policyholder needs to utilize their policy as collateral for a loan or when an individual is gifting a policy to another person. The complete transfer of ownership ensures that the new owner assumes full responsibility and enjoys the benefits that come with the life insurance contract. Understanding this term is vital for anyone studying life insurance practices, as it directly impacts policy management and rights associated with the policy.