Which of the following statements about assignments of life insurance policies is (are)true?
I.Under a collateral assignment,the policyowner assigns a life insurance policy to secure a loan.
II.Under an absolute assignment,only limited ownership rights in a policy are transferred.

Question

Quizplus · Accepted Answer

Statement I is true. A collateral assignment occurs when a policyholder assigns their life insurance policy to secure a loan. This means that the lender will receive the death benefit of the policy if the policyholder dies before the loan is repaid.

Statement II is false. Under an absolute assignment, full ownership of the policy is transferred to the new owner. This means that the new owner has complete control over the policy, including the right to change beneficiaries and surrender the policy for cash value.

Which of the Following Statements About Assignments of Life Insurance