What is a Policyholder?
A policyholder is the individual who purchases and manages an insurance policy. Also called a policy owner, they have control over the coverage and are responsible for keeping it active by paying the associated premiums on time.
Policyholders rights and responsibilities
The policyholder is the individual who shops for the policy and completes the insurance application. Once the insurer approves their application and issues the coverage, the policyholder has control over the policy. If another person wants to make changes, they’ll have to do so through the policyholder.
In order to maintain coverage, the policyholder is responsible for paying the policy’s premiums by their due dates, whether that’s annually, monthly, or on another schedule.
Policyholders vs. insureds
With most types of insurance, the policyholder — the person who owns the policy — and the insured — the person the policy protects — are one and the same. When you buy home insurance, you’re buying it for your house to protect yourself after a covered loss there, for example.
But with life insurance, the policyholder and the insured can be two different people.
If you buy life insurance on yourself, you are both the policyholder and the insured. But you may also choose to buy life insurance on someone else. In those cases, you’re the policyholder, but the individual you bought life insurance for is the insured.
Even then, you still get full control over the policy as the policyholder. If the insured wants to make changes to the policy, they’ll need your approval to do so.
When the policyholder and the insured are two different people, the policyholder has the option to name themselves as the beneficiary. That means they’ll get the payout from the life insurer when the insured dies.
In order to buy life insurance on someone else, you’ll need to be able to show the insurance provider that you have an insurable interest in the person on whom you want to buy a policy. That means showing the insurer that your financial future is interlinked with the potential insured, as would be the case with a spouse or business partner.