Participants in an insurance policy

The parties to an insurance policy.

In this entry we are going to clarify once and for all the participants in an insurance policy, it is something elementary before taking out any insurance policy, to know who is involved.

Insurance company or insurer:

The insurer is an officially authorised legal entity, which in exchange for a payment (the insurance premium) assumes the consequences or damage of the risk covered by the insurance policy that it takes out with the policyholder.

Its basic functions are:

1. Risk Management: Assesses and manages risks in insurance policies, calculating premiums and setting conditions.
2. Damage Coverage: Covers damage and loss in insured events under the policy.
3. Payment of compensation: Commitment to indemnify the insured in the event of a claim.
4. Contract Compliance: Processes claims in a fair and timely manner.

The policyholder:

The policyholder is a key figure in the world of insurance. Below, I explain their role and responsibilities:

1.Policyholder and Owner of the Insurance: The policyholder is the person who takes out the insurance and is therefore the policyholder and owner of the policy.

2. Decide on the coverages: The policyholder also has the power to decide which coverages will be included in the policy and which will not. This choice depends on their needs and preferences.

Responsibilities of the Policyholder:

Payment of the premium: The policyholder is responsible for paying the insurance premium. It is important to make payments on time in order to maintain active coverage.

Updating of details: The policyholder’s details appear as the contracting party in the policy. Therefore, it is crucial that they are correct and up to date. If there are changes (e.g. address or beneficiaries), the policyholder must inform the insurer.

Future Cancellation: If the policyholder decides to cancel the policy in the future, he/she must follow the established procedures, as a general rule give one month’s notice, here is a video about it.

Relationship with the insured and beneficiary:

The policyholder can be the same person as the insured (the one who is covered by the insurance) or the beneficiary (the one who will receive the compensation in the event of a claim) it is also possible that the policyholder is neither the insured nor the beneficiary, but simply the policyholder.

The insured:

The insured is the natural or legal person who holds the interest that is the object of the insurance, i.e. who is protected by the insurance, and may or may not coincide with the policyholder and the beneficiary of the insurance.

You are entitled to compensation in the event of a claim (in some cases, this compensation may be passed on to the beneficiary).

In short, the insured is the person or entity protected by the insurance.

The beneficiary:

It can be the same person as the policyholder and the insured, or not, the beneficiary is the person who will receive the compensation in the event of a claim.

That is to say, the person who receives the benefits of the insurance policy and can be one or several people, in life insurance it is natural that they are family members or heirs, although they do not have to be. If a life insurance policy has no beneficiary, it will be dealt with as if it were an inheritance, being distributed among the legal heirs.