What Is a Policy Holder?

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    Many people mistake being a policyholder for the person covered under a specific insurance policy. While this can be true in some cases, it is not always the case. The policyholder is not necessarily the same as the person or persons insured by a specific policy. It can also be said that the insured person is not necessarily the policyholder.

    What is a policyholder?

    A policyholder is the person who owns a specific insurance policy. In fact, it doesn’t even need to be a person. It can be an organization, company, or another type of entity. An example of this would be a homeowners association for a condominium complex. In either case, the policyholder is the one who can decide who is covered, who the beneficiaries are, and who benefits from the policy's protection.

    Does the policyholder have to be the insured?

    No. In fact, it is more common than you think for the policyholder not to be insured on the policy. Let’s say you own a public relations business with your cousin. Your cousin does all the design work and if she was to die in an accident, the business would have to dissolve. You can insure your cousin and be a beneficiary in the instance she passes away. However, you are not insured by the same policy, so if you pass away, your cousin would not be covered. You would need to have a separate life insurance policy for yourself.

    How many people can a policyholder insure?

    A policyholder can insure as many people as an insurance company allows under a specific plan. For example, if you are the policyholder for your homeowners insurance, chances are everyone under your roof is covered under the policy, including yourself. However, you should confirm that, as some insurance companies consider children of a certain age no longer covered under the family umbrella.

    What can the policyholder do that the insured parties cannot?

    Because the policyholder owns the insurance policy, the holder is the only one who can make changes to coverage. For example, you purchased accident insurance for an upcoming family vacation. Since you are the policyholder, only you can name the beneficiary in case of an accident or death.
    Another example would be determining the amount of coverage. If you want to decrease your life insurance from $500,000 to $250,000, as the policyholder you have this right. However, your beneficiary does not.

    What is the policyholder responsible for?

    The policyholder is responsible for ensuring timely payments are made to the insurance company so there is not a lapse in coverage. The holder is also responsible for providing all required documentation and updates if contact information or beneficiaries change. The policyholder must provide accurate reporting of accidents, claims, or any other incidents.

    Can there be more than one policyholder?

    Yes, there can. In fact, this is often the case in homeowners or renters insurance. An example would be a married couple purchasing homeowners insurance. They are both the policyholders, can both make decisions that affect the policy, and can both determine who are the beneficiaries. The same could apply to business partners. Both partners can be the policyholders and the insured and incur the same costs and benefits.
    Being the policyholder is much more than being covered by an insurance policy. It bears with it contractual responsibilities with your insurance company. Although you own an insurance policy, it does not mean you are covered by it. Because of this, you should clarify before purchasing that you are getting the coverage you want and need for those you want and need it to protect.

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