Which statement about an absolute assignment is correct?

Which statement about an absolute assignment is correct?

• A. It transfers all rights to the assignee with no residual rights left to the assignor.
• B. It can be rescinded by the assignor.
• C. It leaves residual rights with the assignor.
• D. It has no effect on ownership rights.

Answer: (A)

Absolute assignment means transferring every ownership right in a life insurance policy from the current owner to a new owner. Once this transfer is complete, the assignee becomes the new owner and the original owner has no control or remaining ownership interests—no ability to change the beneficiary, surrender the policy, borrow against it, or revoke the arrangement. Because of that, absolute assignment is typically irrevocable. The statement that it transfers all rights with no residual rights left to the assignor precisely captures this idea. For contrast, remember that collateral assignment is a partial transfer used to secure a loan, where the original owner often retains ownership and some control. And the notion that the assignment has no effect on ownership rights is incorrect because ownership does change hands under an absolute assignment.

Absolute assignment means transferring every ownership right in a life insurance policy from the current owner to a new owner. Once this transfer is complete, the assignee becomes the new owner and the original owner has no control or remaining ownership interests—no ability to change the beneficiary, surrender the policy, borrow against it, or revoke the arrangement. Because of that, absolute assignment is typically irrevocable. The statement that it transfers all rights with no residual rights left to the assignor precisely captures this idea.

For contrast, remember that collateral assignment is a partial transfer used to secure a loan, where the original owner often retains ownership and some control. And the notion that the assignment has no effect on ownership rights is incorrect because ownership does change hands under an absolute assignment.