ASSIGNMENT OF INSURANCE Meaning and
Definition
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Assignment of insurance refers to the legal transfer of the benefits, rights, or interests of an insurance policy from the original policy holder to another party. This arrangement typically occurs when the policyholder, also known as the assignor, decides to transfer their insurance policy to a third party, known as the assignee. The assignee can be an individual, a company, or a financial institution, and their interest in the insurance policy can vary based on the agreement.
In this process, a written agreement known as an assignment of insurance document is signed by the assignor and the assignee, mentioning all the terms and conditions of the transfer. This document can outline the extent of the transfer, including whether it is partial or full, and the specific rights being assigned. The assignor relinquishes their rights to the assignee, who then becomes the new policy owner and beneficiary.
The assignment of insurance can occur for various reasons, such as when a person sells their policy to another individual or institution, when it is used as collateral for a loan, or when it is part of an estate or trust arrangement. It is important to note that the assignment of insurance does not alter the terms and conditions of the original policy, and the assignee is expected to fulfill all the obligations and pay the premiums associated with the policy.
