Louisiana Series 101 – Life Insurance Practice Exam

Which of the following describes an absolute assignment?

Transfers ownership rights in the policy. Transfers rights in the policy only as collateral. Transfers the beneficiary designation. Does not transfer any rights.

Correct Answer:

Transfers ownership rights in the policy.

Explanation:

Absolute assignment means you transfer ownership rights in the policy to someone else. The person who receives the assignment becomes the new owner and gains full control over the policy—this includes things like paying premiums, borrowing against the cash value, surrendering the policy, and naming or changing the beneficiary if the owner chooses. The original owner no longer has any ownership powers. This is different from collateral assignment, which only uses the policy as security for a loan and does not transfer ownership. It’s also not about changing who gets the benefits under the policy, which is a change of the beneficiary designation. And it isn’t simply transferring nothing at all.

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