Policyholder and Insured: Who Are They?

In a life insurance contract, two essential roles are often misunderstood: the policyholder and the insured. However, understanding these two figures is crucial for optimizing the management of your contract and ensuring a smooth transmission according to your wishes. This article will help you understand who the policyholder and the insured are, their respective roles, and responsibilities.

What is a policyholder?

The policyholder is the person who subscribes to the life insurance contract. This is the individual who takes the initiative to conclude the contract with the insurance company. The policyholder is the one who pays the premiums and, consequently, has the power to designate the beneficiary or beneficiaries of the contract. They can also make withdrawals, request advances, or modify the beneficiary clause as long as no accepting beneficiary has been designated.

The responsibilities of the policyholder

The policyholder has several important responsibilities:

• Choice of contract: They must choose the type of life insurance contract that best fits their financial goals.
• Designation of beneficiaries: The policyholder can designate one or more people who will receive the capital or annuity upon the insured's death.
• Payment of premiums: They are responsible for paying premiums as defined in the contract terms.
• Management of the contract: They can make investment decisions, partial withdrawals, or request advances on the contract.

What is an insured?

The insured is the person on whom the insured risk lies, meaning the individual whose life or death triggers the contract's benefits. In many cases, the policyholder and the insured are the same person, but it is also possible for the policyholder to take out a contract on a third party (for example, a parent for their child).

The implications of being the insured

The insured plays a key role in the life insurance contract:

• Triggering of benefits: The insured's death or survival triggers the payment of capital or annuities to the beneficiaries.
• Choice of guarantees: The guarantees chosen in the contract depend on the personal situation of the insured (age, health condition, etc.).

Differences between policyholder and insured

It is important to clearly distinguish the roles of the policyholder and the insured:

• Authority: The policyholder has control over managing the contract, while the insured is the individual whose life or death is considered for benefit payments.
• Responsibility: The policyholder is responsible for decisions related to the contract, such as naming beneficiaries and paying premiums. The insured, however, has no decision-making power unless they are also the policyholder.
• Flexibility: A policyholder can choose whether or not to be the insured. In cases where the policyholder and the insured are different people, it may have specific tax and legal implications.

Examples of policyholder/insured configurations

Here are some common configurations:

Policyholder and insured are the same person

This is the most common configuration. The policyholder takes out a life insurance policy for themselves. In case of death, the capital is paid to the designated beneficiaries.

Policyholder and insured are different people

For example, a parent can take out a life insurance policy on their child. In this case, the parent is the policyholder, and the child is the insured. The capital will be paid to the designated beneficiaries in the event of the child's death.

Tax and legal implications

Tax and legal implications vary depending on whether the policyholder and the insured are the same person. For example, the premiums paid may be subject to different tax rules depending on the situation. Therefore, it is important to fully understand these differences to optimize the tax benefits of life insurance.

Conclusion

Understanding the roles of the policyholder and the insured is essential for effectively managing a life insurance contract. These two key figures play a decisive role in how benefits will be paid and the tax implications of the contract. Whether you are the policyholder, the insured, or both, it is crucial to understand your rights and responsibilities to make the most of your life insurance policy.