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What does “policyholder” mean for insurance?

Keep in mind...
  • A policyholder is the person named on the insurance policy contract
  • Joint policyholders have both their names on the insurance policy contract
  • Policyholders, when it comes to group health insurance, are sometimes employers

When discussing insurance, one of the terms that is most frequently used is policyholder. However, it can remain ambiguous exactly what this means and the precise definition can vary depending upon the situation. It means something different for private health insurance than it does for public health insurance programs like Medicare or Medicaid.

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It also means something different depending upon the type of insurance you have. There are also varieties of policyholders in addition to further sub-categories of these policyholders. This is quite a complex topic, but with some investigation, it is possible to figure out exactly what policyholder means when discussing insurance.

What is an insurance policy?

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Since we are trying to assess what policyholder means, first we must determine what is meant by a policy. A policy, simply put, is a contract between the insurance company and the insured person or persons. This policy outlines the terms of the agreement including the premium amount, the deductible amount, and coverage.

There is plenty of other information in this contract as well. Co-payments are typically described in detail in these documents, at least in a general sense. Co-payments can vary greatly based on what kind of medical care the insured person is receiving.

Definition of the Insured

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It is also important to discuss what is meant by the insured. This is not always the same as the policyholder. The insured is whoever is covered by the insurance policy.

This person may not be responsible for paying for part or any of the policy, but they are the ones who are receiving the benefits of it. Often, this difference exists because the insured is a dependent of the policyholder and cannot afford to pay for the costs of the insurance policy themselves.

The Insurer

Understanding what is meant by the insurer is also important to understanding what a policyholder means for insurance. The insurer is the company or individual who agrees to offer the insurance to the insured party and pay them for medical expenses based on the terms of the policy.

The insurer is typically an insurance company that writes up the policy and ensures that the policy is followed.

Typically, a premium and deductibles must be paid to make sure that the insurance company does its part and pays the insured pay for any qualifying expenses.

Who is the policyholder?

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As stated previously, there is sometimes a difference between the insured and the policyholder. The policyholder is the person whose name is actually on the insurance policy. They are the ones who pay the monthly premiums, deductibles, co-payments, and possibly more for the benefits of the insurance policy.

Their dealings with the insurance company are more direct than the insured. Since it is their policy, addressing any issues with the insurance policy or asking any questions about it is up to them. They have to figure out if their dependents can be covered by the policy, as well.

Dependents

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The word dependent has been used quite a bit in this article. A dependent is a stepchild, an adopted son or daughter, a biological son or daughter, or a foster child that is eligible. Children below the age of 18 are also considered dependents.

A person between the ages of 18 and 23 that goes to a post-secondary school full-time is also a dependent. A child, regardless of age, that is unable to live on their own due to mental disability is considered a dependent as well.

The Affordable Care Act expanded the definition of dependent. Now, adult children twenty-six or younger are considered dependents without any restrictions based on their employment, marital, or student status. Even if you do not provide any financial support or they live by themselves, such children can still be classified as dependents on health insurance.

Domestic partners and their children can also be considered dependents on your health insurance. They have to be a legal, unmarried adult unmarried and living with you. It is also required that they pay for some part of your living expenses along with you or they are not dependents.

Certificate Holder

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Making a distinction between the policyholder and a certificate holder is also crucial. While the policyholder is the person who actually possesses a certain insurance policy, the certificate holder is someone who has a certificate denoting that the policyholder has insurance. This is a certificate regarding the insured, which we discussed earlier.

Certificate holders are more common among group health insurance plans. In that case, the insured party is usually an employee covered in that plan and the actual policyholder is the company the employee works for instead of the employee themselves.

Joint Policyholder

Sometimes, the party considered the policyholder is not the one actually covered by the insurance. This is often the case in group health insurance policies offered by larger companies to their employees. The company is the policyholder and the employees are the insured.

In addition to this, it is possible for there to be joint policyholders on a single insurance policy. This simply means that there are other individuals covered or at least named in the policy.

Joint policyholders are more common for traditional households, while both heads of the householder might be on a single insurance policy.

Additional Insured

An additional insured person is neither the same as a dependent nor the same as a joint policyholder. An additional insured person actually receives coverage under the insurance policy and is on the certificate of insurance along with the policyholder.

This means that in the event of a future claim, they are covered by the same insurance policy as the policyholder. They do not necessarily have to contribute toward the cost of the policy, though this sometimes happens due to the nature of the situation.

Third Party Liability

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One type of insurance that is uncommon but can be vital is third party insurance. This insurance is what covers the policyholder against claims made by a third party. Third party insurance is usually mostly involved with car insurance.

The third party that is making a claim against the policyholder could be someone that the policyholder supposedly was involved in an accident with, regardless of the circumstances. Third party liability insurance can prove particularly useful for those policyholders who have quite a few assets to protect and do not wish to lose them in a legal dispute.

Reviewing the Meaning of a Policyholder

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Essentially, the definition of a policyholder as far as insurance goes is the person whose name is actually on the insurance policy. They are typically responsible for complying with the terms of the policy and paying for the expenses of it. There can be multiple policyholders, as demonstrated by the section on joint policyholders.

Sometimes, the policyholder is not a person but a company that is offering a group health insurance plan to its employees. Generally speaking, though, the policyholder is a person and not a business.

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