Absolute Assignment

A life insurance policy may be transferred to another party through:

1. A.A collateral or absolute assignmentCorrect - the two assignment types.
2. B.The grace periodThe grace provision governs a late premium and keeps the policy from lapsing. It affects the timing of payment, not who owns the contract.
3. C.A dividend optionA dividend option directs what happens to a participating policy's divisible surplus. It decides where money goes, not who holds ownership of the contract.
4. D.Changing the insuredThe insured cannot be swapped out. The contract is written on one specific life and the mortality risk was underwritten on that person; transferring the policy moves ownership while the insured stays fixed.

Why: Ownership can be transferred via a collateral assignment (partial, for a loan) or an absolute assignment (complete).

Ownership of a life insurance policy can be permanently transferred to another party through:

1. A.An absolute assignmentCorrect - full ownership transfer.
2. B.A free-look requestThe free look lets a new owner return the contract for a refund within the allowed period. That rescinds the policy rather than handing it to someone else, so no ownership passes.
3. C.A policy loanA policy loan borrows against the cash value and leaves the owner exactly where they were; the insurer simply holds a claim against the proceeds until it is repaid. No ownership rights change hands.
4. D.A collateral assignment (which is only partial)This is the closest miss because it is a real assignment, but it pledges the policy only as security for a debt and only up to the amount owed. The rights revert once the debt is paid, so the transfer is neither complete nor permanent.

Why: An absolute assignment transfers full ownership of the policy to the assignee.

An absolute assignment of a life policy:

1. A.Doubles the benefitAssigning a policy moves rights between people; it does not change the amount of insurance. The assignee receives the same coverage the assignor held.
2. B.Cancels the policyThe point of an assignment is that the contract continues under new ownership. Termination happens through surrender, lapse, or exercise of the free look, none of which is at issue here.
3. C.Transfers full ownership permanentlyCorrect - complete ownership transfer.
4. D.Is only a temporary pledgeThat describes a collateral assignment, which secures a debt and unwinds once the debt is paid. Absolute means the transfer is complete and the assignor keeps no reversionary interest.

Why: An absolute assignment permanently transfers full ownership of the policy.

A policyowner ABSOLUTELY assigns her policy to her nephew but never changes the named beneficiary (her daughter). At the insured's death, conflicts between assignee and beneficiary are resolved by recognizing that an absolute assignment:

1. A.Is void unless the beneficiary consentsWrong. REVOCABLE beneficiaries cannot block ownership transfers.
2. B.Automatically makes the assignee the beneficiaryWrong. Ownership and beneficiary status are distinct - the assignee must exercise the change right.
3. C.Transfers all ownership rights, including the power to change the beneficiary designationCorrect. The nephew now holds every ownership right - the daughter's designation survives only until he changes it.
4. D.Transfers only rights up to a stated debt amountWrong-but-tempting. Debt-limited transfer is the COLLATERAL assignment.

Why: Absolute assignment makes the assignee the owner with full rights, including beneficiary changes; unresolved old designations create disputes, but ownership rights dominate - which is why assignments should be paired with beneficiary updates. Citation: assignment doctrine; ownership rights analysis. Takeaway: absolute assignee = new owner with every right the old owner had.