Skip to Content
Father, mother and daughter laughing symbolizing a time of life when learning about life insurance is important.
Life Insurance Basics

Life insurance basics part 2: Life insurance roles

This article discusses the key roles involved in a life insurance policy - the insured, the beneficiary, and the policy owner.

Understanding and defining the various roles in a life insurance policy

This article is the second in a three-part series, designed to help clear-up any confusion about life insurance.

First, the basics: No matter what type of policy you have, its basic purpose is to pay a death benefit to the policy beneficiaries when the insured dies.

Every policy has a few key roles, known as the insured, the beneficiary and the policy owner. The policy owner is responsible to pay the premiums, and in exchange, the insurance company promises to pay the death benefit to the named beneficiaries. With that backdrop in mind, let's take a closer look at the key roles.

Definition: Insured

The person whose life the insurance policy covers. When the insured dies, the policy pays a death benefit. The insurance company evaluates the underwriting risk based on the insured's physical condition and, to an extent, financial condition. In most cases, the named insured can't be changed.

Definition: Beneficiary

The person(s), or party(ies) who receives the death benefit when the insured dies. The policy owner names one or more beneficiaries; the insurance company pays the named beneficiaries according to the most current beneficiary designations. Only the policy owner can name and change the beneficiary designation. With most policies, the beneficiary designations can be changed at any time.

Definition: Policy owner

Most often the policy owner is the only party with rights to the policy. A life insurance policy is considered property. Only the policy owner can request the policy be terminated, borrow against cash values, change beneficiaries and ownership or make other changes to the policy.Now that you've read the life insurance definitions, let's look at how these roles might play out. As you'll see below, sometimes one person or entity can fill more than one life insurance policy role.

Role example 1:

  • Policy owner - 45 year old mom, Brenda
  • Insured - 10 year old son, Jack
  • Beneficiary - Charity cancer foundation

Role example 2:

  • Policy owner - John's Manufacturing
  • Insured - Key sales professional Sharon
  • Beneficiary - John's Manufacturing

Role example 3:

  • Policy owner - 30 year old dad, Sam
  • Insured - 30 year old dad, Sam
  • Beneficiary - Sam's wife, Suzi

Role example 4:

  • Policy owner - Brown Family Trust
  • Insured - Max Brown
  • Beneficiary - Brown Family Trust

Now that you know the basic roles involved with life insurance, it may also be helpful to review some common life insurance policy terms. And, if you missed part 1 of this article series, learn about basic insurance types here.

Note: This basic information is intended to give you a good foundation on which to begin a conversation with your financial adviser about life insurance. Your agent should be able to answer all the questions you have about your insurance policy options, how much you will pay, and the protections each policy provides.

 

 

WEB.1357.03.15

Arrows linking indicating relationship

Related Articles

Young man researching basic life insurance terminology on the Protective Life Learning Center.

Life insurance basics part 3: Life insurance terms

Learn more
Happy family with 2 young children enjoying family time in their living room.

3 considerations when calculating your family's life insurance needs

Learn more
Woman looking pensive and wondering why her life insurance claim was denied.

Life insurance claim denied?

Learn more

All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by Protective Life or its subsidiaries.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax-related decisions. For information about Protective Life and its products and services, visit www.protective.com.

Companies and organizations linked from Learning Center articles have no affiliation with Protective Life or its subsidiaries.