What is the definition of Absolute Assignment?

An absolute Assignment is an owner's act of completely transferring all of his rights, benefits and liabilities to a life insurance policy or annuity. The ownership of the policy or annuity changes hands from the owner to another person or institution. This act is usually irreversible and binding.

For example, a person applying for a loan from a bank is asked to take on life insurance and then assign the policy to the bank. This is to protect the bank in case the debtor dies before the loan is completely paid. The bank stands to get a part of the death benefit - the amount equal to the outstanding loan. The rest of the death benefit goes to the beneficiary/beneficiaries of the debtor.

Another example would be when a company insures a key person and names itself as the beneficiary. When that key person leaves the company, the company may decide to sell the insurance policy to the employee in exchange for the cash value of the policy. The transfer is done using an absolute assignment. The former employee will fully own all the benefits, rights and obligations of the sold insurance policy.

• Competitive State Fund
• Excess and Surplus Lines
• Commission
• Businessowners Policy / BOP
• Employer’s Liability