As the proud owner of a life insurance policy you have signed a contract with your life insurer according to which a lump sum will be paid to the beneficiaries of that contract in the event of your death. Did you know that there are in fact six different parties to a life insurance contract, each with clearly defined roles and responsibilities? Read on to learn more.
The policyholderThe policyholder purchases and owns the life insurance policy or contract. In most cases the policyholder is the person whose life is insured by the contract (the life assured) but this is not always the case. For example, an employer (the policyholder) might purchase life insurance for an employee (the life assured).
The policyholder is the only person who can make changes to a policy, for example change the names of the policy beneficiaries or increase the cover amount.
As the policyholder you are obliged to:
- Ensure that premiums are paid monthly
- Inform the insurer of any changes relevant to the policy, for example if the life assured starts smoking or leaves the country
- Submit claims in the event of the death of the life assured
Important note: A policyholder cannot purchase life cover in someone’s name without proving that they have an insurable interest in the life of the insured person, or in other words, that the death of the insured person would result in financial loss for the policyholder. A policyholder cannot insure someone’s life without that person’s knowledge.
The payer is responsible for paying the policy premiums. In most cases the policyholder and the payer are the same person.
Important note: The payer has no rights to the life insurance policy and cannot make any changes to the contract.
The life assured
The life assured is person whose life in insured by the contract. In the event of the death of the life insured the life insurance benefit amount will be paid to his/her beneficiaries. In most instances the policyholder and the life assured are the same person.
It is the responsibility of the life assured to answer all questions put to him/her by the insurer honestly and in as much detail as possible. It is also his/her responsibility to inform the policyholder of any changes relevant to the policy, for example a new job. Failure to do either of these things might result in reduced or rejected claims.
Important note: How do the policyholder and life assured know what lifestyle changes are relevant to their policy? These changes will be listed in your policy document. Be sure to read all the documents that you receive from your insurer carefully. As a 1Life policyholder you should refer to your Policy Schedule and your Policy book. Please contact us if you require either of these documents.