What term describes the act of transferring ownership of an insurance policy?

The act of transferring ownership of an insurance policy is known as absolute assignment. This process involves the policyholder relinquishing all rights and control of the policy to another party, which could be an individual or an entity. The new owner then assumes full responsibility for the policy, including the obligation to pay premiums and the right to make future changes such as designating beneficiaries or adjusting coverage.

In contrast, collateral assignment involves transferring only certain rights or interests in a policy, typically as collateral for a loan. This means the original policyholder retains ownership and can regain full control once the underlying obligation is satisfied.

Policy dividends refer to the returns paid to policyholders of participating policies, reflecting the insurer's profitability, and do not relate to ownership transfer. Beneficiary adjustment involves changes made to the individuals or entities entitled to the benefits of the policy upon the insured's death, which is also unrelated to ownership transfer.

Thus, absolute assignment distinctly denotes the full transfer of ownership, making it the correct term for this situation.