Everything You Need to Know about Policyholder in Life Insurance

A policyholder in life insurance typically refers to a person who owns the policy. It is the person who not only purchased the policy but has every authority to exercise its terms in the policy contract. They are also responsible for ensuring all the premium payments are made up-to-date.

In most cases, the policyholder is the insured person, but depending on the relationship, one can add more people to the policy as its beneficiaries.

In most cases, the policyholder is the insured person, but depending on the relationship, one can add more people to the policy as its beneficiaries.

As a policyholder in life insurance, you need to select the best coverage for the stable future of your loved ones. But selecting coverage for your life insurance policy is not that easy. Even your policy-buying decision also depends on it.

So, here are some tips that you can follow to select the required coverage that will eventually help in making your policy-buying decision.

Assess the Needs of Your Current Lifestyle

Your current lifestyle requirements include your general living standard and spending habits. So, before choosing life coverage from insurance, it is crucial to assess your lifestyle needs.

Also, when you have a crystal clear idea about your lifestyle requirements, you will choose the coverage that will secure your loved one’s future accordingly. Also, even in your absence, they don’t have to compromise their lifestyle.

Consider Your Age and Responsibilities

While choosing coverage for life insurance, it is important to consider your age and financial dependents upon you. If you are the sole bread earner of your family, then your financial responsibilities automatically increase.

While those who are still unmarried have fewer dependents, thus, they must choose their life insurance coverage accordingly.

Consider Existing Debts and Liabilities

Evaluate Your Income Beforehand

Analysing your income as per your family's financial requirements is another significant thing to consider. It will provide you with a more realistic picture of your financial situation, thus will prevent you from overburdening your financial situation.

So, the coverage also depends upon the premium amount you can pay from your income.

Considering all these things will give you a better grasp of how a policyholder should choose coverage for their term insurance.

Depending upon the unique needs of different individuals, there are different insurance policies in India. Listed below are some of the most common types of policyDepending upon the unique needs of different individuals, there are different insurance policies in India. Listed below are some of the most common types of policyholders in life insurance:

• Term Life Insurance Policyholder: Term life insurance is one of the most affordable and popular types of life insurance available. With nominal premium rates, this policy offers maximum coverage. But if the policyholder outlives the policy's term, they will not be able to avail of any of its maturity benefits.
• Whole Life Insurance Policyholder: Whole life insurance provides life coverage until the policyholder's death. Here the policyholders can choose either a participating or a non-participating policy per their financial needs.
• Endowment Policyholder: An endowment policy is best for individuals looking for maximum coverage alongside a sizable saving component. These are also considered the most suitable types as they act as an instrument for savings and insurance.
• Unit Linked Insurance Policyholder: The ULIP insurance product is known for its versatile nature and flexibility. It offers dual benefits of life insurance and investment. A portion of its premium ensures the policyholder’s coverage. At the same time, the rest is invested into different money market instruments like equity funds and other securities.
• Retirement Policyholder: Retirement insurance policy offers benefits post your retirement. It primarily focuses on providing you with security and financial stability after retirement. Also, it provides death benefits.
• Child Insurance Policyholder: Child insurance product is ideal for a child’s financial protection in future. A child can even avail of its benefits in the presence or absence of the policyholder.
• Money Back Policyholder: Money-back insurance is one of the best life insurance products as it offers policyholders a certain percentage of the total sum assured at some intervals. Also, after maturity, the entire remaining assured amount is paid to the policyholder.

These are some popular types of policyholders holding specified life insurance policies. So, depending upon one’s requirements, customers can become any of these policyholders and enjoy competitive advantages.

A policyholder in life insurance can transfer his title, interest and rights to another one by assigning it to them. Once the ongoing insurance policy is transferred to the new owner, the assignee can enjoy its claims.

Mainly there are two reasons why a policyholder in life insurance is changed:

• To provide security for a loan
• To secure the financial interest of another person

So, for changing the existing policyholder, the policyholder needs to send an application or assignment form to the life insurance company with all the details of the assignee. It will include the assignee's name, address, signature, and contact information, along with the reason for the change and his relationship with the policyholder.

Also, the following documents should be submitted for changing the ownership of the policy:

• Ownership change form
• Form 60/61/49A of the new owner
• Self-attested address and identity proof of the new owner
• Recent photograph of the new owner
• Death certificate (in case of death of the existing policyholder)
• Health declaration form of the life insured (in case the policy has lapsed for more than 180 days)

If an individual fails to submit all these documents, the life insurance company will fail to settle any claims made.

In order to know what a policyholder means in life insurance and understand insurance better, it is important to be aware of some important terms like insured and beneficiary.

Check out the below-stated information to know what they are and how they differ from the policyholder.

Policyholder Vs Insured

A policyholder is undoubtedly the life insurance policy owner, and they acquire every right to make decisions that affect the policies. A policyholder is insured in most cases, but they can also insure other persons like their business partner or spouse.

But a policyholder doesn't need to be always insured by the life insurance policy company. The term “insured” is the person or people whose names are mentioned in the insurance policy as insured.

Policyholder Vs Beneficiary

Only a policyholder in life insurance can list the policy's beneficiary. A policyholder himself can never be a beneficiary. A beneficiary is an entity or a person whose name in the insurance policy is mentioned for acquiring the benefits upon the policyholder’s death.

The beneficiary of a policy can be one, two, or more persons. It can also be a charity or your estate. If the policyholder does not name any beneficiary.

Thus, this blog provides comprehensive knowledge about a policyholder in life insurance, different types of policyholders, and how they are different from insured or beneficiaries. Also, one learns how to select the coverage and change policyholders for a particular life insurance company.