A policyowner ABSOLUTELY assigns her whole life policy to her adult son. Under the California life insurance assignment rules, which statement BEST describes the consequence?
Explanation
Under California Insurance Code §10130 and §10170 and standard policy provisions, an ABSOLUTE assignment is a complete transfer of all ownership rights in the policy from the assignor to the assignee. The assignee becomes the new owner and may exercise every right: change the beneficiary, take policy loans, surrender for cash, elect dividend options, and so forth. A COLLATERAL assignment, by contrast, transfers only a limited interest (typically to a creditor as security for a debt) and reverts to the original owner when the debt is paid. The insurer normally requires written notice but is not itself a party to the assignment. Option B describes a partial or collateral assignment. Option C misstates the insurer's role (notice only). Option D invents a family-only restriction that does not exist; any competent adult can be an assignee.
Law Reference: California Insurance Code §10170 (assignment of policy)Practice all 315 questions free — no signup required.
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