What is a Policyholder?
A policyholder is the person or organization that owns an insurance policy. They are the primary individual responsible for paying the premiums associated with the policy and maintaining it in good standing. The policyholder holds the rights to make changes to the policy, such as adding beneficiaries, adjusting coverage limits, or canceling the policy altogether.
In the context of term life insurance or final expense insurance, the policyholder is the insured individual or someone with an insurable interest in them. For example, a parent might be the policyholder of a term life insurance policy that insures their own life or the life of a spouse. The policyholder ensures that premiums are paid consistently, which keeps the coverage active for the insured beneficiaries.
When it comes to making claims, the policyholder plays a central role. If the policyholder passes away, beneficiaries named on the life insurance policy can make a claim to receive the death benefit. This process highlights the policyholder’s importance in determining how insurance benefits will be distributed.
The policyholder also has the option to change the beneficiaries or adjust the coverage amount, provided that these changes comply with the terms and conditions of the insurance policy. Understanding the role of the policyholder is essential for anyone considering purchasing life insurance, as it defines who has control over the policy and its benefits.