What happens to the policyholder's rights when a life insurance policy is assigned absolutely?

When a life insurance policy is assigned absolutely, the rights associated with that policy are fully transferred to the assignee. This means that the assignee, who is the individual or entity receiving the rights, gains complete control over the policy. The policyholder relinquishes all rights, including the right to make changes to the beneficiary, the right to borrow against the policy, and any rights to receive policy benefits.

This form of assignment is often utilized for various reasons, such as securing a loan or for estate planning purposes, where the policyholder wishes to ensure that the death benefit is directed to someone else. Since the policyholder no longer holds any claim to the policy once it has been assigned absolutely, it's critical for individuals considering this step to fully understand the implications of such a transfer.

Other options reflect incomplete scenarios regarding the rights of the policyholder in an absolute assignment. For instance, retaining full rights contradicts the very nature of an absolute assignment, while suggesting that some rights are lost does not fully capture the extent of the transfer. The idea of rights being restored after a year is not applicable to an absolute assignment scenario, as the transfer is permanent until explicitly revoked if allowed.