Life Insurance Basics
What is a life insurance assignment?
A life insurance assignment transfers the ownership or benefits of a life insurance policy to another party. An absolute assignment transfers all ownership rights. A collateral assignment transfers the policy as collateral for a loan — the lender receives the death benefit up to the loan amount, and the beneficiary receives the remainder.
Key Points
- Absolute assignment: transfers all ownership rights to another party
- Collateral assignment: transfers policy as collateral for a loan
- Lender receives death benefit up to loan amount; beneficiary receives remainder
- Collateral assignment is commonly used for SBA loans and business loans
- An independent agent can help you understand assignment options