Posted in Finance, Accounting and Economics Terms, Total Reads: 499
Definition: Contract Holder
Contract holders are people or companies, who by virtue of being listed as a beneficiary in a contract, have the right to certain funds, insurance policies, debt obligations etc, which are expected after some time in the future.
The contract clearly defines the benefits that a contract holder would receive after the given date. If these provisions are not complied with, the holder has to do away with some or all of the benefits as agreed in the contract. Depending on the type of the contract and its structure per say, the holder or owner or a beneficiary designated by the contract holder may receive the benefits outlined in the contract.
The concept of Contract holder also holds relevance in case of a life insurance policy wherein the policy holder:
1. pays premiums to an insurance company
2. And in return receives an agreed upon sum in the case of loss.
The contract holder of a health insurance plan deposits a monthly premium payment to obtain an access to coverage which would offset the costs involved in medical care. When the holder visits a doctor, an insurance claim would be filed, outlining the services provided during that visit. The insurance provider evaluates the claim, determines the services which are covered under the provisions of the policy, and authorizes a payment to either the doctor or to the contract holder.