Which provision involves assigning a part of the policy benefits to another party?

The correct choice centers around collateral assignment, which refers to the practice of assigning a portion of the policy benefits to another party, often as collateral for a loan or obligation. In this context, the policyholder retains ownership of the insurance policy but gives a lender or another entity a right to the benefits under certain conditions. This arrangement is commonly seen in situations where an individual borrows money and uses their insurance policy as security, allowing the lender to collect up to the assigned amount if the borrower defaults.

The nature of collateral assignment is that it is temporary; once the obligation is satisfied, the assignment is typically reversed. This distinguishes it from complete assignment, where all rights and ownership of the policy are transferred to another party, leaving the original policyholder with no further claims or rights to the policy benefits. Relative assignment isn’t a commonly recognized term in insurance, while preferred assignment does not specifically relate to the concept of designating benefits to another party in the way collateral assignment does.