What is a policyholder?

The policyholder is the person who owns the insurance policy. They are the only person who can make adjustments to their insurance coverage.

Headshot of Policygenius editor Nupur Gambhir


Nupur Gambhir

Nupur Gambhir

Senior Editor & Licensed Life Insurance Expert

Nupur Gambhir is a licensed life, health, and disability insurance expert and a former senior editor at Policygenius. 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 Cake.

Updated|4 min read

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When you’re buying life insurance, choosing the people listed in the policy is a really important step. In order for your life insurance coverage to be an effective financial safety net, the right people need to be listed as the policyholder, the insured, and the beneficiary. But what sets each one apart and are they interchangeable? Here is what you need to know so that your life insurance policy can be set up correctly.

The policyholder is the person who buys the life insurance policy and owns it. They are also responsible for paying the premiums to keep the coverage active, and choosing the right policyholder ensures that there isn’t a policy lapse. If you are the policyholder, you are the only person who can make changes to an insurance policy, such as adjusting the beneficiaries.

Who should be the policyholder?

In all types of insurance, such as auto insurance or homeowners insurance, the policyholder is defined as the person who owns and manages the insurance coverage. The same stands true for life insurance. 

The policyholder of a life insurance policy should be someone who has the financial resources to make premium payments for decades to come. If the policyholder cannot afford to make insurance payments, then the coverage will lapse and there won’t be a death benefit payout. For the most part, it should also be the person who is covered under the life insurance policy. Most people take out life insurance policies on themselves because they are setting up a financial safety net for their loved ones if they die. Some policyholders are able to take out life insurance policies on someone else if they have the financial justification for it. For example, you may be able to take out a final expense life insurance policy on a parent to pay for their funeral costs if they die. 

One important note: You cannot take out a life insurance policy on someone else without financial justification.

The policyholder vs. the insured

The insured is the person whose death prompts the life insurance payout. Because of this, the person listed as the insured should also be someone whose death would have a negative financial impact on loved ones. 

The policyholder and the insured can be different people. Though as we mentioned above, they are usually the same person because you have to demonstrate the financial justification for getting a policy. Owning a life insurance policy and naming yourself as the insured makes sense because you are creating a contingency plan for your dependents — taking out a large life insurance policy on someone else can be suspicious if their death won’t hurt your financial standing. 

Because life insurance policies pay out when the insured individual dies, they have to go through the underwriting process. How much a life insurance policy costs is determined by the insured’s age, gender, health, family history, and lifestyle choices. If the policyholder and the insured are two different people, the insured will still have to sign off on the final policy documents. (Not getting the insured’s signature is considered life insurance fraud.)

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The policyholder vs. the beneficiary

The beneficiary of a life insurance policy is the person who gets the life insurance payout once the insured dies. 

The policyholder and the beneficiary are also usually two different people — the policyholder generally buys the life insurance policy to protect the financial health of the listed beneficiaries.

For example, if you are married, you may take out a life insurance policy on yourself and list your spouse as the beneficiary. You would own the policy and also be listed as the insured. Doing so would ensure that if you died prematurely, your spouse would receive money to replace your financial contributions to the household and wouldn’t have to give up their standard of living. 

But if you take out a life insurance policy on someone else, you may be the policyholder and the beneficiary. 

From the example above, if you take out a life insurance policy on your parents to cover their end-of-life costs, you would likely name yourself as the beneficiary of the policy to receive the death benefit. 

Learn more about beneficiaries 

Once you decide there is a need for life insurance coverage, it’s important to establish who will be the policyholder to manage your coverage. This person will pay the premiums so that the life insurance policy stays active and pays out a lump sum if there is an unexpected death in the family. The policyholder is usually the person that is covered in the life insurance policy — most people own a policy to create a contingency plan for their unexpected death. But under some circumstances, you may opt to be the policyholder and not the insured. 

Frequently asked questions

Who is the policyholder in an insurance policy?

The policyholder of an insurance plan is the person who owns and manages the policy. They are also responsible for paying the premiums to keep the policy active.

What is the difference between the policyholder and the insured?

The policyholder controls the policy, while the insured is the person whose death prompts the death benefit payout. They are usually the same person in a life insurance policy, but can occasionally be different people.

What type of policy pays benefits to a policyholder?

When the policyholder takes out a life insurance policy on someone else and lists themselves as the beneficiary, they get the life insurance death benefit. The policyholder will need to prove the financial reasoning for taking out a policy on someone else in order to get coverage.