What is true about a policy assignment?

A policy assignment specifically involves the transfer of rights and ownership from one party to another, which can occur in various contexts, such as when a policyholder assigns their rights to someone else, permitting them to receive benefits or manage the policy. This often applies in situations such as selling a policy, pledging it as collateral for a loan, or simply transferring ownership to another individual.

The concept of ownership is critical because the person who holds the rights to a policy can make decisions about it, including making changes or receiving payouts from it. This transfer is essential for realigning the ownership structure according to the policyholder's wishes or circumstances.

Understanding this principle helps clarify why other choices are less accurate. For instance, authorizing an agent to modify a policy pertains to the agent's role, not the ownership transfer that is at the core of an assignment. Similarly, a beneficiary designation involves naming who will receive the death benefit but does not convey ownership of the policy itself. Lastly, the ability for a beneficiary to designate who receives the benefits does not imply an ownership transfer; rather, it pertains to the distribution of benefits upon the policyholder's death.