What does the absolute assignment of a life insurance policy do?

The absolute assignment of a life insurance policy refers to the complete transfer of ownership rights from the original policyholder to another party, often referred to as the assignee. This action means that all rights associated with the policy—such as the right to change beneficiaries, the right to borrow against the policy, and the right to make changes to the policy itself—are fully relinquished by the original owner.

The concept of absolute assignment is significant in various contexts, including estate planning, divorce settlements, or when someone wishes to gift a policy to another person. By transferring all ownership rights, the new policyholder gains full control and responsibility for the policy, including any associated premiums and potential benefits upon the insured's passing.

This transfer of rights is distinct from other types of assignments, such as collateral assignments, where some rights might be retained by the original policyholder.