What is a Policyholder?

What Is A Policyholder? Policyholder definition. Who else is covered besides the policyholder? What’s the difference between the policyholder, insured, and beneficiary

What is a Policyholder?
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The policyholder is the person who owns the policy, regardless of the form of insurance. Being a policyholder is relatively simple, whether purchasing auto or house insurance. You're in charge of overseeing insurance coverage and ensuring that it is paid. However, if you're purchasing life insurance, you'll need to name beneficiaries and keep your policy updated, making adjustments if your financial (or life) circumstances change.

Policyholder definition

"What is a policyholder?" many people wonder. A policyholder is a person who purchases and thereby owns an insurance policy. As the policyholder, you're usually insured for whatever the insurance is. As a result, if you are buying auto insurance for your vehicle, the policy documentation will refer to you as the policyholder. Because you are the policyholder, your automobile insurance will automatically cover you if you are involved in an accident.

Who else is covered besides the policyholder?

In addition to the policyholder, others are frequently covered by the insurance. The majority of policies cover relatives you share a house with, such as your spouse, parents, siblings, or children, for car, renters, or homeowners insurance.

If your insurance doesn't cover household members or relatives by default, you can add them as a policyholder. You may be charged for the additional policyholders by some companies. Here are a few examples:

Car insurance

When your auto insurance covers passengers in your vehicle, you must add additional drivers to your policy to ensure that they are covered while driving.

Rental insurance

Your dental insurance may cover your spouse or family members living with you, but not everyone in your home is. If you have roommates, the rental insurance you have will not cover them, and you'd have to include them, or they'd have to acquire their own renter's insurance to be covered.

Homeowners insurance

A homeowners insurance coverage covers both the building and contents of your home. Personal property losses of all household members will be reimbursed by homeowners insurance. Make sure the coverage is adequate to cover everyone's belongings.

Life insurance

Life insurance isn't like other types of insurance in that it functions uniquely. Life insurance policies are intended to benefit your loved ones rather than you once you die away. You may be the policyholder, but the insured party could be someone else. You'll also need to name one or more beneficiaries for the policy.

What's the difference between the policyholder, insured, and beneficiary

You may be asking the difference between being a policyholder, an insured, or a beneficiary now that you understand how different insurance policies function. Here's how it works:

Policyholder

The person who "owns" the policy is known as the policyholder. They pay the premiums, handle the claims, and so on. Others can be added to the procedure to be covered as well. Ensure that the limits are large enough to cover all insured individuals.

Insured

The person who is covered by the insurance policy is known as the insured. Almost all types of insurance immediately protect the policyholder and their immediate family members residing in the same household.

Life insurance operates uniquely. A policyholder can purchase life insurance for the benefit of another person. A wife, for example, could get a term life insurance policy for her husband and name her adult son and herself as beneficiaries. She influences the life insurance policy as a policyholder. The wife and her son will get the death benefit if her husband dies during the coverage period.

Beneficiary

In a life insurance policy, the beneficiary is the person who receives the payout. You can identify one or more beneficiaries, and as the owner or policyholder, you can specify how much of the death benefit each should receive. It's better to name beneficiaries of legal age, which is usually 18 or older in most states. Adding a kid as a beneficiary can lead to legal issues over how the money is distributed after you pass away.

The takeaway

  • The policyholder owns the insurance policy. You have control over the insurance as the policy owner, and you are covered by it in all instances except life insurance.
  • In most cases, your close family members who live in your home are immediately insured. This includes your children, spouse, parents, grandparents, and living siblings.
  • You can always add non-family members as additional insureds to your policy. You may have to pay more to cover the other people.
  • The policyholder owns and controls the policy in life insurance, although the insured isn't always the policyholder. You can obtain life insurance and name someone else as the beneficiary. The death benefit will be paid to the person(s) you name as beneficiaries if they die.

A policyholder is defined as the owner and controller of an insurance policy. As the policyholder, you are automatically covered when you get vehicle insurance. You can always add extra people to your insurance coverage by listing them as additional insureds.