What is the difference between the Policyholder and the Life Assured?

Who is a policyholder?

The policyholder is the individual who owns the life insurance policy. This person is responsible for purchasing the policy and ensuring it remains active by paying the necessary premiums. The policyholder holds several important rights and responsibilities, including:

• Choosing the Beneficiaries: The policyholder selects who will receive the death benefit if the life assured passes away.

• Modifying the Policy: The policyholder can modify the policy, such as altering the coverage amount, updating beneficiaries, or even cancelling it.

• Managing Premium Payments: The policyholder must ensure that premiums are paid on time to keep the policy in force.

• Borrowing Against the Policy: If the policy has a cash value component, the policyholder can borrow against it or withdraw.

Who is a Life assured?

The life assured, also known as the insured, is the individual whose life is covered by the insurance policy. The insurance company agrees to pay a death benefit to the beneficiaries if the life assured dies during the term of the policy. Key points about the life assured include:

• Coverage Basis: The insurance coverage is based on the life assured. The underwriting process, including medical examinations and health assessments, focuses on the life assured.

• No Direct Control: The life assured does not have control over the policy unless they are also the policyholder. If they are not the policyholder, they cannot change the policy or manage premium payments.

• Benefit Entitlement: The primary role of the life assured is passive, as their death triggers the payment of the death benefit to the designated beneficiaries.

Different Scenarios to Illustrate the Difference

• Single Role: In many cases, the policyholder and the life assured are the same person. For example, an individual buys a term insurance policy for themselves, pays the premiums, and names their family members as beneficiaries.

• Separate Roles: Sometimes, the policyholder and the life assured are different individuals. For instance, a parent (policyholder) might purchase a life insurance policy on their child (life assured). In this case, the parent manages the policy and pays the premiums, while the insurance coverage is based on the child's life.

Difference between policyholder and life assured?

Wrapping it up!

There is a small difference between a policyholder and a life-assured individual. While a policyholder is the one who plans and buys the policy and could be the life assured individual, the policyholder might also buy the policy for someone else, who in that case will be the life-assured individual.

Note: You should also check the term insurance benefits if you are planning to purchase the term insurance plan.