Massachusetts Life Producer Practice Exam

What does the absolute assignment of a life insurance policy result in?

1. Transfer of all ownership rights to the assignee

2. Transfer of only the death benefit rights

3. Retention of ownership by the original owner

4. Immediate payment to the policy beneficiary

The correct answer is: Transfer of all ownership rights to the assignee

The correct answer indicates that an absolute assignment of a life insurance policy results in the transfer of all ownership rights to the assignee. This means that the new owner, or assignee, assumes complete control over the policy, which includes the ability to change beneficiaries, borrow against the policy, and make any changes to the terms of the contract. In an absolute assignment, the original policyholder relinquishes all rights and privileges associated with the policy. This can occur for various reasons, such as for financial planning purposes or the sale of the policy. It's important for both parties to understand that once the assignment is made, the original owner has no remaining claims to ownership or benefits related to the policy. Understanding this concept is crucial for those in the life insurance industry, as it impacts how policies can be managed and transferred between individuals.