What, why, and how should you proceed with an insurance assignment. Learn the difference between an absolute versus conditional assignment. How does insurance assignment affect Muslims? How do you make an assignment to a company?

What is an Insurance Assignment?

The transfer of ownership from the Policy Owner (Assignor) to another person (or institution aka Assignee). The Assignee has control of the insurance policy as if the Assignee is the Policy Owner.

There is no change to the life assured in the policy and the policy remains unaltered.

There are 2 types of assignments:-

  • Absolute Assignment: Complete rights and ownership of the policy transferred to the Assignee.
  • Conditional Assignment: Rights and ownership of the policy under certain conditions to the Assignee.
    For example, as collateral for a loan for a term of 30 years

 

Absolute Assignment

  • Overview: Legally transfers ownership of a policy to another party.
  • Revocation: Cannot be revoked. But a willing Assignee can reassign back or revoke the assignment.
  • Muslim-specific: Muslim policy owner can fully assign policy to anyone (Muslim/non-Muslim) as beneficiary.

 

Conditional Assignment

  • Overview: No legal transfer of ownership of a policy but assignee consent required for any contractual changes.
  • Revocation: Cannot be revoked. But a willing Assignee can reassign back or revoke the assignment.
  • Muslim-specific: Conditional assignment is not applicable for Muslims.

 

Why an Insurance Assignment?

  • Gift or voluntary transfer.
  • For scenarios where a Muslim wants to ensure a life insurance claim goes to a non-Muslim (and vice versa).
  • Settlement, transferring the policy to trustees to give effect to successive or contingent interests.
  • Transfer to existing trustees of a settlement or to beneficiaries in pursuance of the trusts.
  • Mortgage, transfer of mortgage, or reassignment on repayment.
  • Assign