designation of a policy's death benefit or its cash surrender value to a creditor as security for a loan. If the loan is not repaid, the creditor receives the policy proceeds up to the balance of the outstanding loan, and the beneficiary receives the remainder. Because life insurance is freely assignable, it is readily acceptable to lending institutions as security. Also, the lender is certain to receive the money should death strike the borrower before the loan can be repaid.

1. signing over title, rights, or other interests to another person.
2. in a letter of credit (L/C), transfer by a beneficiaryof all or part of the credit facility to another party, which must be confirmed by the advising bank.
3. writing on the back of a stock certificate transferring ownership to another holder.
4. transfer of debtor's property to creditors, called an assignment for the benefit of creditors. Transfers in the 90 days prior to a bankruptcy petition may, however, be set aside by a bankruptcy trustee.See alsovoidable preference.
5. option writer's notice to the Options Clearing Corp. of his intention to fulfill an offsetting buy, resulting in all assignment in favor of the seller.

feature in a life insurance policy allowing a policyowner to freely assign (give, sell) a policy to another or institution. For example, in order to secure a loan, a bank asks to be assigned the policy. If the insured dies before repayment of the loan, the bank would receive a portion of the death benefit that equals the outstanding loan, the remainder of the death benefit being payable to the insured's beneficiary. The fact that life insurance is freely assignable makes it a useful financial instrument through which to secure a loan. The insurance company does not guarantee the validity of the assignment.