What is a Contract Holder?

Malcolm Tatum
Malcolm Tatum

Contract holders are individuals or other entities that are designated as the owner of a debt obligation, security, or other type of segregated fund where there is the expectation of receiving some type of return in the future. The contract holder is responsible for making sure that he or she complies with all terms and conditions outlined in the contractual agreement. Depending on the structure and type of the contract, the holder or owner may ultimately receive the benefits outlined in the contract, or a beneficiary designated by the contract holder may enjoy those benefits.

Insurance policies are a good example of agreements with a designated contract holder.
Insurance policies are a good example of agreements with a designated contract holder.

Insurance policies are a good example of agreements with a designated contract holder. The owner or holder is the individual responsible for paying the premiums, and complying with the requirements that are detailed in the policy. In exchange for owning the coverage, the contract holder is entitled to receive benefits from the plan as outlined in the terms and conditions of the governing agreement.

With life insurance, the holder is able to provide resources that can be used to settle end of life expenses.
With life insurance, the holder is able to provide resources that can be used to settle end of life expenses.

For example, the contract holder of a health insurance plan would remit a monthly premium payment in exchange for access to coverage that would offset the costs associated with medical care. When the holder visited a physician, an insurance claim would be filed, detailing the services provided during that visit. The insurance provider would evaluate the claim, determine what if any of the services are covered under the provisions of the policy, and authorize a payment to either the physician or to the contract holder.

This same general approach is true with life insurance. The contract holder pays the premium in exchange for the covenant of the insurance provider to pay an agreed-upon sum to a beneficiary at the time that the annuitant or individual who is covered by the policy, should die. With this arrangement, the holder is able to provide resources that can be used to settle end of life expenses or provide resources for the care of loved ones once the annuitant is no longer alive to do so.

While the expectation is that a contract holder will observe all the terms of a contract, including remitting regular payments, that is not always the case. When the holder does not abide by the agreement, this creates what is known as a breach of contract. At that point, the provider has the option of declaring the contract null and void, and the contract holder loses all rights and privileges that were previously made available by that agreement.

Malcolm Tatum
Malcolm Tatum

After many years in the teleconferencing industry, Michael decided to embrace his passion for trivia, research, and writing by becoming a full-time freelance writer. Since then, he has contributed articles to a variety of print and online publications, including wiseGEEK, and his work has also appeared in poetry collections, devotional anthologies, and several newspapers. Malcolm’s other interests include collecting vinyl records, minor league baseball, and cycling.

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Discussion Comments


Singers have to sign contracts with their managers. Before my manager started doing any work for me, he handed me a contract.

I had to agree to follow through on any gigs he scheduled. I also had to do everything within my power to further my musical career. A certain percentage of my earnings would go to my manager, and this amount was outlined in the contract.

He had to agree to do what was in my career’s best interests. He had the responsibility of dealing with media, scheduling appearances, and talking to everyone involved in the process for me.


I am the contract holder of a credit card agreement. I agreed to always pay them at least the minimum amount due, and they agreed to provide credit services to me.

Though I always try to pay off my balance each month to avoid interest, I can see how it would be tempting to pay just the minimum if you were having financial troubles. Credit card companies like it when you leave amounts unpaid, because the interest that you owe them grows.

This is why some credit card companies are eager to develop contracts with just about anyone. Even if you have no credit or bad credit, you can probably get a contract that involves an annual fee.


My cousin works online doing medical transcription. He receives all of his paperwork and orders through email, and when he started the job, he had to sign an online contract.

The company encouraged him to print a copy of the contract. They kept their electronic copy on file. When he typed his signature into the space provided in the PDF, it was as good as signing it by hand.

I’m sure that if there ever were a breach of contract and he claimed he did not sign anything, his computer could be confiscated and the evidence found to show that he had. I doubt this would ever happen, though, because he is happy with his job.


I had insurance through my former employer. The money to pay my part of the premiums was taken out of my paycheck, and the company paid the other portion.

When I quit, I found out that a personal contract with an insurance company would cost a lot more. My new job did not offer health insurance, so I decided it would be cheaper to get on my husband’s plan.

Whenever either of us goes to the doctor, the clinic files an insurance claim. The clinic waits to find out how much the insurance will pay and how much we still owe. Then they send us a bill. Though technically my husband is the contract holder, he never really has any direct contact with the insurance company.

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