Regardless of the type of insurance you purchase, the owner of the policy is known as the policyholder. Whether you’re shopping for auto or home insurance, owning a policy is pretty straightforward. you are in charge of managing the insurance coverage and making sure it gets paid. But if you’re buying life insurance, as the policyholder you’ll need to assign beneficiaries and keep the policy current, making changes as your financial (or life) situation changes.
definition of insured
many people ask “what is a policyholder?” A policyholder is the person who buys the insurance policy and therefore owns it. he is normally covered as a policy holder for whatever the insurance is. Therefore, if you purchase auto insurance on your vehicle, the auto insurance documents will name and refer to you as the policyholder. if you have an accident, you will automatically be covered by your car insurance because you are the policy holder of the coverage.
Who else is covered besides the policyholder?
In many cases, others, in addition to the policyholder, are automatically covered by the insurance. When it comes to auto, renters, or homeowners insurance, most policies cover family members you share a home with, such as your spouse, parents, siblings, or children.
If your insurance doesn’t automatically include household members or family members, you have the power as the policyholder to add them. some companies may charge you for additional insureds. here are some scenarios:
While your car insurance will help cover the passengers in your car, you should add additional drivers to your car insurance policy to ensure they are covered while driving.
rental insurance may cover your spouse or family who lives with you, but not everyone who lives in your household is included. if you have roommates, they are not covered by your policyholder’s renter’s insurance. you would need to add them, or they would have to purchase their own renters insurance to be financially protected.
A homeowners insurance policy protects the structure and contents of your home. Homeowners insurance will reimburse personal property losses for all household members up to your policy limits. make sure the coverage is enough to reimburse everyone’s property.
Life insurance works a little differently than other types of insurance. It is mainly because life insurance policies are designed to benefit your loved ones after you pass away instead. you may be the policyholder, but someone else may be the insured party. In addition, you must name one or more beneficiaries of the policy.
what is the difference between policyholder, insured and beneficiary
Now that you have an idea of how different insurance policies work, you may be wondering what the difference is between being an owner, an insured, or a beneficiary. here’s a breakdown:
The policyholder is the person who “owns” the policy. they pay premiums, deal with claims, etc. the policyholder can add others to the policy so they are also covered. just make sure the limits are high enough to include all insured people.
The insured is the person covered by the insurance policy. In almost all types of insurance, the policyholder and members of their immediate family who live in the same household are automatically covered.
Life insurance works a little differently. A policyholder may purchase life insurance to insure another person. For example, a wife may purchase a term life insurance policy with her husband as the insured and name her own adult child and herself as beneficiaries. As the policyholder, she controls the life insurance policy. If her husband dies during the coverage period, her wife and child will receive the death benefit payment.
The beneficiary is the recipient of the payment in a life insurance policy. You can name one or more beneficiaries and, as the owner or policyholder, designate how much of the death benefit you’d like each to receive. it is best to name beneficiaries who are of legal age, which in most states is 18 years or older. Naming a minor as a beneficiary can cause legal complications as to how the minor would receive payment after her death.
- The insured is the owner of the insurance policy. As the policyholder, you have control over the insurance, and in all cases except life insurance, you are covered by the insurance.
- In most types of insurance, your immediate family living in your home is also automatically covered. this includes children, your spouse, parents, grandparents, and siblings who live with you.
- You may be able to add non-family members to your insurance as additional insureds. you may have to pay more to cover the extra people.
- In life insurance, the policyholder owns and controls the policy, but is not always the insured. he can buy a life insurance policy and name another person as insured. if they die, the person(s) you name as beneficiaries will receive the death benefit.
The definition of a policyholder is the owner and controller of an insurance policy. If you’re purchasing auto insurance, you’re automatically covered as the policyholder. You can usually add other people to your insurance by listing them as additional insureds on your policy.