Contract Holder
A contract holder is the individual or organization that owns and controls an insurance policy. The contract holder is responsible for maintaining the policy, paying premiums, and making decisions related to coverage, renewals, and beneficiary designations. In most cases, the contract holder is also the insured person, but in group insurance, the employer or plan sponsor acts as the contract holder on behalf of all covered members.
How It Works
The contract holder has the legal right to modify, cancel, or renew the policy, and is the main point of contact for the insurer regarding updates, billing, or changes to coverage terms. According to the Financial Consumer Agency of Canada, the policyholder is the person who owns the insurance policy: they sign the contract, pay the premiums, and have the authority to make decisions about how the policy is used. In group insurance, a group policyholder is a legal entity that enters into a contract of group insurance with an insurer in respect of plan members of a group, and group life and group health insurance is purchased by group policyholders on a voluntary basis for their plan members, helping provide plan members and their eligible dependents protection for planned and unexpected life events. Because the policyholder or contract owner can differ from the named insured, a business may hold the policy while the policy wording separately defines who else qualifies as an insured. For group benefits, employees receive a certificate of insurance summarizing their coverage, while the employer, as contract holder, retains the full master policy.
Example:
If a Canadian employer purchases a group health and dental plan for its staff through an insurer such as a provincial Blue Cross, the employer is the contract holder and retains the full master policy. Each employee receives a certificate of insurance outlining their benefits, but only the employer, as contract holder, can authorize major changes to the policy.
What to Watch For:
Confirm who the contract holder is when dealing with a group plan, since only the holder can authorize major changes to the policy and the certificate of insurance an employee receives is only a summary of coverage rather than the full master policy. Remember that the contract holder may not be the same as the named insured, because a business can hold the policy while the policy wording separately defines who else qualifies as an insured. As the party responsible for maintaining the policy, paying premiums, and making decisions about coverage, renewals, and beneficiary designations, the contract holder remains the insurer's main point of contact for billing and coverage updates.
