What term is used when someone other than the insured applies for a policy?

The term used when someone other than the insured applies for a policy is third-party ownership. This situation typically arises when an individual or entity, such as a parent, employer, or business partner, takes out an insurance policy on another person. This arrangement can serve various purposes, such as providing financial protection for dependents or ensuring a business can continue to operate without financial strain if a key employee is lost.

In the context of insurance, it's important to distinguish third-party ownership from situations like direct ownership, where the insured and the policyowner are the same person. Likewise, terms such as beneficiary designation focus on who will receive benefits upon the insured's death, rather than who holds the policy itself. Understanding third-party ownership allows individuals to grasp how insurance can be structured to support diverse financial and relational strategies.