A policy of life insurance payable to the insured, or in the event of his death to his personal representatives, may be assigned unless forbidden by statute, therefore a policy payable to the wife of the insured, or another may be assigned by the united act of the insured and the beneficiary. Thus a policy taken out for a wife's benefit is often assigned by her and her husband to his creditors to secure their debts. In some states statutes forbid the assignment of such policies for the benefit of creditors. The written assignment must be delivered to the assignee to be effective. On some occasions assignments have been declared valid where the intention was clearly proved though both the written assignment and the policy remained in the possession of the assignor. An assignee who holds a policy as security is entitled on its payment only to the amount of his claim and advances with interest, including premiums paid to keep the policy alive and thus preserve his security. More generally premiums paid for this purpose are chargeable on the proceeds of the insurance, but a mere volunteer who pays the premiums acquires no lien on the proceeds of the policy when it is paid. Nor can one who ought to pay the premiums give a lien on the policy to another for money advanced by him to pay them; and an assignee who has promised to pay the premiums may be liable should he fail to keep the policy alive.
Contracts of reinsurance are often made by all insurance companies. In some states the reinsuring company becomes liable to an action by the beneficiary named in the original policy. Where the reinsuring company, by agreement, undertakes to reinsure the members of the other company should they execute applications for that purpose, any member who does this is not required to be reexamined or comply with other conditions respecting his age or health.
A policy may be canceled or surrendered by mutual agreement. After the death of the insured the rights of the parties become fixed, and there can be no cancellation. During his lifetime the insured may abandon his contract by refusing to pay the premiums, but an intention to abandon will not be presumed, nor will the taking out of a second policy before his failure to pay the premiums on the other establish an abandonment. If both parties treat the contract as void, neither can revive it without the consent of the other. As the beneficiary has a vested or definite interest in the contract, the insured cannot, by surrendering the policy, cut off the rights of the beneficiary without his or her consent unless permitted to do so by the contract itself.