Which term describes giving over your rights to the policy; does not change the insured or amount of coverage?

Which term describes giving over your rights to the policy; does not change the insured or amount of coverage?

• A. Entire contract
• B. Assignment
• C. Beneficiary designation
• D. Trust

Answer: (B)

Transferring ownership rights in a life insurance policy is called assignment. When you assign a policy, you’re giving someone else control over the policy—decisions about premiums, loans, cancellations, and even who receives the payout if the policy pays out—while the person insured and the face amount of coverage typically remain unchanged by the act of assignment itself. There are two main forms: absolute assignment, which transfers all ownership rights, and collateral assignment, which temporarily uses the policy as security for a loan. The other terms don’t fit as neatly. Entire contract refers to the whole agreement between the insurer and the insured, not to transferring ownership. Beneficiary designation changes who will receive the death benefit but does not transfer ownership of the policy. A trust is a separate ownership arrangement that can own the policy, but the concept described by “giving over your rights to the policy” is specifically assignment.

Transferring ownership rights in a life insurance policy is called assignment. When you assign a policy, you’re giving someone else control over the policy—decisions about premiums, loans, cancellations, and even who receives the payout if the policy pays out—while the person insured and the face amount of coverage typically remain unchanged by the act of assignment itself. There are two main forms: absolute assignment, which transfers all ownership rights, and collateral assignment, which temporarily uses the policy as security for a loan.

The other terms don’t fit as neatly. Entire contract refers to the whole agreement between the insurer and the insured, not to transferring ownership. Beneficiary designation changes who will receive the death benefit but does not transfer ownership of the policy. A trust is a separate ownership arrangement that can own the policy, but the concept described by “giving over your rights to the policy” is specifically assignment.