What is the result of the absolute assignment of a life insurance policy?

The result of an absolute assignment of a life insurance policy is that all incidents of ownership are transferred to the assignee. This means that the person or entity to whom the policy is assigned gains complete control over the policy. They can make changes such as updating beneficiaries, borrowing against the policy, or cashing it in if it has a cash value. The original policyholder relinquishes all rights and privileges associated with the policy, effectively transferring full ownership.

In the context of life insurance, "incidents of ownership" include the rights to make decisions about the policy, which are crucial for the administration of the policy and its benefits. When ownership is fully assigned, the assignee can act independently of the original policyholder regarding the policy's management and benefits.

This complete transfer of ownership differentiates absolute assignments from other types of assignments, like collateral assignments, where only certain rights are assigned while the original owner retains others. The implications of this can be significant in terms of financial planning, taxation, and beneficiary designations.