Definition: Assignment means legal transference. It is a means whereby the beneficial interest, right and title under a life insurance policy get 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
In simple words, Assignment is transferring all your rights on your policy to another person. Like transferring money from one person to another. When the money goes out from you, then it is not your money. You will be not the owner of the policy once you had assigned to some other person. It is not yours anymore. You cannot claim any benefit out of the plan. You can do nothing to the plan except paying the premium. Even if you are going to pay all the premiums in future, it still is an property of another person.
You will no longer enjoy any benefits from the policy you had assigned. All the benefits like survival benefit, money backs, maturity benefits will be paid only to the person to whom you had assigned the policy. Even the death benefit from the policy will be paid only to the person to whom the policy is assigned. It becomes an legal asset of the assigned person.
Assignment can be done for any reasons.
A policy can be assigned for getting loans, it can be assigned against getting some money, policy can be assigned even because of love and affection. Example being policies assigned in favor of wife, kids and grand children.
Anytime during the policy term, a policy can be assigned.
Assignment can be done to an individual person or even to a company or a bank or trust or to anything that has an legal existence as a person.