Home Life insurance Life insurance basics Who’s who on a life insurance policy Who’s who on a life insurance policy It’s important to have the right people listed in your life insurance policy. Read on to learn more. Written by: Huma Naeem | Reviewed by: Nupur Gambhir Nupur Gambhir Nupur Gambhir is a content editor and licensed life, health, and disability insurance expert. She has extensive experience bringing brands to life and has built award-nominated campaigns for travel and tech. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service. | Updated on July 15, 2023 Why you should trust Insure.com Quality Verified At Insure.com, we are committed to providing honest and reliable information so that you can make the best financial decisions for you and your family. All of our content is written and reviewed by industry professionals and insurance experts. We maintain strict editorial independence from insurance companies to maintain editorial integrity, so our recommendations are unbiased and are based on a comprehensive list of criteria. Knowing who’s who on a life insurance policy is an important part of securing financial security for your family. If you list the wrong beneficiaries, then the hard-earned money you put towards premiums won’t provide the right people with the right financial support. Here’s everything you need to know about who’s who on a life insurance policy. Key Takeaways The person who owns the life insurance policy is the only person who can make changes to the policy and pays the policy premiums. The insured is the person whose life is covered on a life insurance policy. Only the beneficiaries mentioned on the policies are entitled to collect the life insurance death benefit. The three most important people on your policy Generally there are three parties to a life insurance policy: The policyholder: The person who owns the policy and pays the life insurance premiums. The insured: The person whose life is insured. When the insured dies, the life insurance company pays out the death benefit. The beneficiary: The person who collects the death benefit when the insured dies. Most of the time, the policyholder is also the insured. For instance, the breadwinner of a family might purchase an insurance policy on their own life to protect their spouse and children if they die. In that case, the breadwinner is the policyholder and the insured. Rarely, a policyholder could also be the beneficiary. That same spouse might purchase an insurance policy on their spouse’s life, naming themselves as the beneficiary, to protect their family’s financial welfare in case their spouse dies. If there are three different people filling the three different roles, there could be tax implications and you will experience what is referred to as the Goodman Triangle. In general, two of the roles should be the same person to avoid the tax trap. Who is the owner of a life insurance policy? The owner of a life insurance policy is called the policyholder, and this is the person who pays for and has control over the life insurance policy. The owner has full control and responsibilities including: Paying the policy premiums. Choosing how long coverage lasts. Determining who the beneficiaries are and how much of the death benefit they will receive. Making any changes to the policy, such as changing the beneficiaries or surrendering the policy. Using the cash value if it is a permanent life insurance policy. Who is the insured on a life insurance policy? The insured on a life insurance policy is often the same person who owns the policy, but they don’t have to be. The life insurance company only pays out the death benefit when the insured dies. Because of this, premiums are also based on the insured’s health, lifestyle, age and other factors. The insured person doesn’t have the right to adjust the policy, unless they are also the policyholder. QuickTake What is a life insurance beneficiary? Life insurance riders: What they are and how they work How to make sure you have enough life insurance Understanding your life insurance policy options How life insurance works for high-net-worth individuals Family caregivers guide to insurance: What you need to know Combination life insurance or long-term care: Make the right pick Covid-19 and life insurance: What you need to know? 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If the primary beneficiary dies before the insured, the contingent beneficiary gets the death benefit. Policyholder vs. insured vs. beneficiary PolicyholderInsuredBeneficiaryResponsible for paying insurance premiumsPerson whose death would prompt death benefit payoutPerson who receives the death benefit payoutAble to adjust policy Can only adjust policy if they are also the policyholderCannot make any changes to the policy, everOnly person who can access the cash value if they own a permanent life insurance policyPerson whose health is what premiums are based onNeeds to be financially impacted by the death of the insured to be listed on the policy If you’re in the market for a life insurance policy, you can compare the best life insurance companies as reviewed by surveyed policyholders right here at Insure.com. Frequently asked questions Who are the legal parties to a life insurance contract? The legal parties tied to a life insurance contract are the policyholder and the insured. The policyholder pays the premiums, and the insured is responsible for being totally honest in the application process. Are the policy owner and insured the same person? The policyholder is usually also the insured, but sometimes, they can be different people. For example, if someone may buys a life insurance policy on someone else, such as their spouse or child. Can there be more than one insured person in a life insurance policy? A life insurance policy only covers one person, unless you purchase joint life insurance. Joint life insurance is paid out differently than a typical life insurance policy, so you should talk to a financial advisor before purchasing it to make sure it is the right option for you. × Get Free Life Insurance Quotes Today! 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