Ask the Life Insurance Expert
What is the criteria in order to be labeled "the policy owner" of a life insurance policy: person who pays premiums, beneficiary, insured, or who?
The owner of a life insurance policy (policyholder) is the person that is listed as such and is the one legally responsible for paying the premiums.
In general, there are three parties to a life insurance policy:
- Policyholder - Individual who owns the policy.
- Insured – Individual whose life is insured.
- Beneficiary - Individual who collects the death benefit when the insured person dies.
The owner of a life insurance policy can be the insured, or the owner can be the beneficiary. But the beneficiary can’t be the insured.
The policyholder (owner) of the policy is the individual who is allowed to exercise certain rights during the lifetime of the person insured on the life insurance policy. The most common rights include:
- Designation of policy beneficiary
- Change policy beneficiary
- Transfer of ownership
- Cancel or surrender the policy
- Selection of settlement options
- Assign policy benefits
- Make policy loans or borrow against its cash value
Read “Who’s who on a life insurance policy” for more details about the role of a life insurance policy owner.