What does absolute assignment in an insurance context involve?

Absolute assignment in an insurance context involves transferring all rights of ownership from the original policyholder to another party. This means that the new owner gains complete control over the policy, including the right to change beneficiaries, take out loans against the policy, and cash it in if desired. By fully transferring ownership, the original policyholder relinquishes all claims and interests in the policy.

This complete transfer is distinct from partial transfers or designations, where the original owner might still retain some rights. For example, designating multiple beneficiaries or assigning rights to a financial advisor does not entail relinquishing ownership of the policy. In these cases, the original owner maintains their rights, while only certain privileges or benefits are modified or shared. Absolute assignment, on the other hand, signifies a definitive and total transfer of all ownership rights, which is fundamental in various insurance transactions, particularly for estate planning or securing loans using the policy as collateral.