Policyholder

Last Updated: September 1, 2020

Definition - What does Policyholder mean?

A policyholder is a person or entity whose name appears on the records of the insurance firm.

The policyholder is a person or entity who owns or controls an insurance policy and has the privilege to exercise the rights outlined in the contract. This party is often, but not always, the insured and may or may not be one of the policy’s beneficiaries.

For example, if you purchase a home insurance policy under your own name, then you are both the policyholder and one of the insureds as you are protected by all the policy terms outlined in the contract.

If you live with your family, they are also considered insureds under the policy. They are not policyholders since they do not control the policy, but they are still entitled to the protections it offers. The same can be said of life insurance policies where there are multiple beneficiaries.

There can also be situations where there is more than one policyholder but even in those unique situations, there is one “named policyholder” or “named insured” who is responsible for leading the policy. This person will also have the power to request changes to the policy from the insurer.

Policyholders are also sometimes referred to as policy owners.

Insuranceopedia explains Policyholder

An insurance policy is at its core a legal contract. As part of meeting the requirements of a legally enforceable contract, there needs to be at least two entities that are party to the contract or agreement.

One of these parties is the insurance company (the insurer) and the other is the policyholder (the client) who purchases, pays for, and agrees to the terms and protections outlined in the policy documents.

The policyholder is often also the insured but that does not always have to be the case. Depending on the contract, the policyholder may be the holder or controller of the policy while the insured is a different party.

For instance, a business owner could purchase a life insurance policy on the life of her business partner and name herself as the beneficiary. In this case, she is the policyholder and the beneficiary, but not the insured.

Policyholders are typically related to the insured in some way—they can be their relative, a partnership, or—in the example above— a corporation that they are involved with. But in most cases like with automobile and home insurance, the policyholder is also the insured.

As an entity signing a contract, the policyholder has several obligations to the insurer. These include the provision of all and accurate information for underwriting purposes, honoring the agreed specific terms, and paying the required premiums.

Put simply, the policyholder is the person or entity that has purchased the policy and has the authority to exercise the rights stated in the insurance policy contract—including the right to control the policy.

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