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Life Insured

The life insured is the individual whose life is covered under a life insurance policy. If the life insured passes away, the insurer pays the death benefit to the designated beneficiary or to the policyholder, depending on the policy structure. The life insured may or may not be the same person as the policyholder. For example, a spouse, parent, or business partner may own a policy that insures another person’s life.

The risk assessment for the policy is based on the life insured’s age, health, occupation, and lifestyle. These factors determine eligibility, premium cost, and policy terms. The insurer’s obligation to pay the death benefit is tied directly to the life insured’s status and the policy being active at the time of death.

Example:

If a parent purchases a $250,000 life insurance policy on their own life, they are both the policyholder and the life insured. If they buy the policy to cover their adult child, the child becomes the life insured, while the parent remains the policyholder and may name themselves as the beneficiary.

What to Watch For:

Confirm who is listed as the life insured on each policy, as this determines when and how benefits are paid. Only the policyholder has the authority to make changes, such as updating beneficiaries or canceling coverage. Ensure that the information about the life insured, including health and personal details, is accurate at the time of application to avoid claim issues.

Related Terms

Life Insurance

Life insurance is a financial protection product that provides a tax-free lump-sum payment, known as a death benefit, to designated beneficiaries when the insured person dies. It is designed to replace income, pay debts, cover final expenses, or provide financial stability for dependents and loved ones. Life insurance helps ensure that family members can maintain their quality of life and meet ongoing financial obligations even after the loss of the primary earner.

Beneficiary

A beneficiary is the person or entity designated to receive the proceeds or benefits from an insurance policy upon the policyholder’s death or when a covered event occurs. In life insurance, the beneficiary receives the death benefit as a tax-free lump sum. In accidental death and dismemberment (AD&D) insurance, the beneficiary receives payment if the insured person dies as the result of an accident. Beneficiaries can also be designated in certain health or travel plans that include accidental death benefits.

Term Life Insurance

Term life insurance provides financial protection for a specific period of time, known as the term, such as 10, 20, or 30 years. If the insured person dies during that period, the insurer pays a tax-free lump-sum death benefit to the designated beneficiary. This type of insurance is designed to provide affordable coverage for temporary needs, such as replacing income, paying off a mortgage, or supporting dependents until financial independence is achieved.

Misstatement of Age

Misstatement of age occurs when the age of the insured person is recorded incorrectly on an insurance application or policy. Because age is a key factor in determining eligibility, premiums, and benefit amounts, any error - whether accidental or intentional - can affect the terms of coverage. The misstatement may be discovered during underwriting, at the time of a claim, or during a policy review.

Group Policyholder

A group policyholder is the organization or employer that owns and administers a group insurance plan on behalf of its members or employees. The group policyholder holds the master policy issued by the insurer, manages enrollment, collects premiums, and ensures that the plan complies with contractual and regulatory requirements. In most cases, the policyholder is the employer, while the insured members are the employees and their eligible dependents.

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