What is Absolute Assignment in insurance policies?

Absolute Assignment in insurance policies refers to the permanent transfer of all ownership rights from the original policyholder (the assignor) to another individual or entity (the assignee). This means the assignee gains complete control over the policy, including the ability to make changes, receive benefits, and exercise any rights associated with the policy.

This concept is crucial for individuals who may wish to transfer ownership of their policy for reasons such as estate planning, selling the policy, or using it as collateral for a loan. By executing an absolute assignment, the original policyholder relinquishes all claims and benefits associated with the policy to the new owner permanently.

In contrast, a temporary transfer of rights would only provide limited control and benefits to the assignee, which is not the case with absolute assignment. Other options like securing a loan relates to using the policy as collateral, rather than transferring ownership, and a free look provision allows the policyholder to evaluate a policy after purchase, which is unrelated to the transfer of ownership rights. Thus, the essence of absolute assignment centers on the total and permanent control of the insurance policy being granted to another party.