What is assignment of insurance?
Assignment of insurance is an agreement in which a person signs over all rights in a policy to another person or business. Benefits and proceeds are also assigned.
Assignment on a Loan
At times a life insurance policy is assigned to guarantee a loan. If the insured dies before the loan is paid, the assignee is paid from the proceeds of the policy first before anything is distributed to beneficiaries.
Assignment by Court Order
Insurance may be assigned by court order in divorce proceedings. The ex-spouse and children get all proceeds upon the insured's death.
To Obtain Cash Before Death
A life insurance policy may be assigned to a viatical company, one that pays a lesser amount than the face amount. Proceeds are paid to the viatical company upon the death of the insured.
Assignment of Health Benefits
Health benefits may be assigned to caregivers so medical care does not suffer while waiting for insurance companies to pay medical bills.
Some insurance assignments may be irrevocable, so carefully read any assignment form before signing it.