Final answer:
Brad's son becomes the policy owner, not the insured, and can name his own beneficiaries. Brad won't need to prove insurability again. Tax implications for Brad's son depend on the specifics of the policy and the tax laws.
Step-by-step explanation:
When Brad makes an absolute assignment of his life insurance policy to his son, he is transferring all rights and ownership of the policy to his son. This means that:
- Brad's son becomes the owner of the policy, not the insured. Brad remains the insured individual since the policy is on Brad's life.
- Brad will not have to prove medical insurability again, since the policy is already in force and the act of transferring ownership does not change the risk to the insurer.
- Brad's son can indeed name his own beneficiaries because he now has full control over the policy as the new owner.
- Concerning taxes, whether Brad's son may incur taxable policy gains as the assignee depends on the specifics of the policy and tax laws at the time of the transfer. However, in general, an absolute assignment transfer itself does not create a taxable event. If the policy has a cash value and it is surrendered or if the policy benefits are disbursed, then there could be taxable gains.