What type of assignment is given to a viatical settlement company when a viator sells a life insurance policy?

When a viator sells a life insurance policy to a viatical settlement company, an absolute assignment is executed. This process entails the transfer of all rights and benefits of the life insurance policy from the viator (the seller) to the viatical settlement company.

In an absolute assignment, the individual relinquishes any claim to the policy, effectively allowing the viatical settlement company to assume full ownership. This transfer includes the right to receive the death benefit when the insured passes away. This type of assignment is a common practice in viatical settlements, as it provides the viatical settlement company with the necessary rights to manage the policy, including collecting the death benefit directly.

The other options include collateral assignments, which are different in that they do not transfer ownership of the policy. Instead, a collateral assignment serves as a means of using the policy as collateral for a loan or obligation, allowing the original owner to retain some rights while providing temporary rights to another party. In the context of a viatical settlement, an absolute assignment is essential for the company to fully acquire the policy and the associated rights.