What legal term describes an individual or entity that is not an insured under a contract but has a legally enforceable right?

The term that correctly describes an individual or entity not classified as an insured under a contract but still possesses a legally enforceable right is third-party ownership. This concept is often applicable in various contracts, including life insurance. In a situation involving third-party ownership, a person may purchase a life insurance policy on another person's life. For instance, a parent can buy a policy on a child's life, making the parent the policyholder and the owner of the rights to the policy while the child is the insured individual.

This distinct arrangement allows the policyholder (the third party) to have rights and responsibilities regarding the policy—such as the ability to designate beneficiaries, manage payments, or make claims—despite not being the insured party. Thus, understanding third-party ownership is crucial in recognizing how rights and interests can diverge among involved parties in insurance contracts.