Which of the following provisions allows a person to temporarily give up a portion of...

A collateral assignment is a provision in a life insurance policy that allows the policyowner to temporarily transfer certain ownership rights (e.g., the right to the death benefit or cash value) to a creditor as security for a loan. The assignee (creditor) has a claim to the policy proceeds up to the loan amount, but the policyowner retains other rights and regains full ownership once the loan is repaid.

Option A: Incorrect. Reinstatement allows a lapsed policy to be restored under certain conditions, not related to securing a loan.

Option B: Incorrect. The entire contract provision defines the policy and application as the complete agreement, not related to loans.

Option C: Correct. Collateral assignment temporarily assigns policy rights to secure a loan, as per standard life insurance provisions.

Option D: Incorrect. An automatic premium loan uses the policy’s cash value to pay overdue premiums, not to secure an external loan.

This question is part of the Prometric content outline under “Provisions, Options, Exclusions, Riders, Clauses, and Rights,” which covers ownership and assignment provisions.