What Does It Mean When A Life Insurance Policy Is Assigned? 
The pledge or assignment of all or some a life insurance policy might be made as collateral security . The policyowner has the right to do this . There are many scenarios and planning techniques in which assignments are made . To the extent that some amount of the death benefit was assigned to a third party , that party would receive that amount as a death benefit if death occurs during the existence of the agreement . Normally the assignment would be revocable meaning the policyowner can cancel the agreement at some point . But some estate planning methods involve irrevocable assignments . Policy assignments are also part of the process when a policyowner exchanges one life insurance policy with another . In order to ensure there is no gap in coverage during the process , an absolute assignment of the existing policy to the insurer that will issue the new policy is made . Completion of an exchange agreement with the insurer that will issue the new policy follows and then the new policy is issued before the old policy is surrendered . 