What does policy assignment refer to in life insurance?

Policy assignment in life insurance refers to the transfer of rights and benefits of a policy from one party to another. This can occur when the policyholder decides to assign the policy to another individual or entity, which allows the assignee to receive the benefits of the insurance coverage, such as death benefits, or certain rights associated with the policy. This can be useful in various financial scenarios, including securing loans or settling debts, where the policy may serve as collateral.

In contrast to this, the other options describe different actions that do not align with the concept of assignment. Cancellation relates to terminating the policy, the addition of new beneficiaries refers to changing who will receive benefits upon the policyholder's death, and adjustment of policy premiums involves changing the cost of the policy rather than transferring rights. Understanding policy assignment is crucial for ensuring that policyholders can manage their policies effectively, including leveraging them in financial planning or securing loans.