Florida Health Insurance Terms:
"What is Assignment?"
Assignment: The transfer of the ownership rights of a life insurance policy from one person to another.
Assignment is a means whereby the beneficial interest, right and title under a Policy gets transferred from Assignor to Assignee.
'Assignor' is the Policyholder who transfers the title, and 'Assignee' is the person who derives the title from the Assignor.
Assignment can be made only after acquiring the Policy.
Assignment can be done only for consideration - for money or money's worth or good, moral and meritorious consideration, like Love and Affection.
Assignment can be made by mere endorsement on the Policy or by a separate duly stamped Deed.
Assignment can be done by the Proposer, Policyholder or the Absolute Assignee.
Assignor must be a major, and must have an absolute right over the Policy. Assignment must be in writing and the Assignor's signature along with a Witness is a must.
Notice of Assignment should be submitted to the insurer.
There are two types of Assignments:
Conditional Assignment is usually effected for consideration of natural Love and Affection.
Absolute Assignment is usually effected for valuable consideration.
On Assigning the Policy, the Assignor loses his right over the Policy and the Assignee gets the right and becomes the owner of the Policy.
The Assignee can further re-assign the Policy and he also has a right to sue under the Policy.
A valid assignment once made cannot be cancelled. It can be done only by another valid assignment.
In all the cases, Assignment automatically cancels an earlier Nomination. However, when the Policy is assigned to the insurer say for loan, Nomination gets affected and it does not get cancelled.
Under Conditional Assignment, if the Conditional Assignee dies, the benefit under the Policy goes back to the Life Assured if surviving. Otherwise, the benefit goes to Policyholder's Nominee.
Under Absolute Assignment, if the Absolute Assignee dies, the benefits under the Policy go to the Legal Heirs of the Assignee. Assignment is governed by Section 38 of Insurance Act, 1938.
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