What does policy assignment allow a policyholder to do?

Policy assignment allows a policyholder to transfer ownership rights of their life insurance policy to another person or entity. This means that the new owner can make decisions regarding the policy, such as changing beneficiaries, collecting the policy's cash value (if applicable), or canceling the policy altogether. It is a significant action because it legally alters who has control over the policy and its benefits.

The other options do not accurately capture what assignment entails. Changing beneficiaries typically does not require an assignment and can usually be done by the original policyholder without transferring ownership. Increasing the death benefit limit is generally not a feature of assignment as it involves specific policy provisions and insurer approval. Converting term insurance to whole life is a different process governed by the terms of the insurance policy and does not relate to assignment, which specifically deals with ownership. Thus, the ability to transfer ownership rights is central to understanding the purpose and function of policy assignment.