When a viator sells a life insurance policy, what type of assignment is given to the viatical settlement company?

In the context of viatical settlements, when a viator sells a life insurance policy to a viatical settlement company, the type of assignment given is an absolute assignment. This means that the viator permanently transfers all rights and ownership of the life insurance policy to the viatical settlement company. Once the assignment is made, the viatical settlement company has full control over the policy, which includes the ability to access the cash values, change beneficiaries, or make other decisions regarding the policy.

The absolute assignment is crucial in viatical settlements as it ensures that the viatical settlement company can fully benefit from the policy, especially in instances where the insured person passes away. The amount paid to the viator is typically less than the death benefit of the policy, and the viatical settlement company stands to gain the full benefit of the policy upon the death of the insured.

Understanding this concept is essential when studying life insurance practices, as it reflects the transfer of rights and the long-term commitment involved in such transactions. This assignment must be clearly understood by all parties involved for the settlement to occur effectively.