Proposal Form: Basis of your insurance contract

Insurance Proposal

Insurance is a contract between insurance company and the person want to cover future risk on his life, where the insurer is bound to pay a fixed amount on death of the Life Assured to his nominee in return of premium (one time or regular). This contract starts when insurer accepts the proposal from the proposer on the basis of the details furnished by the proposer in the proposal form (A prescribed format for proposing a life insurance contract).

And since the insurance is based on the principle of Utmost good faith, it means that the customer seeking the insurance must disclose all the personal details (health as well as financial or which ever asked in proposal form). Therefore filling the proposal form correctly is very important, otherwise, can lead to the repudiation of your claim.

proposal-form

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Important information to be furnished in Proposal Form

There are some fixed points which are included in the proposal form of all the insurance companies which has to be filled very carefully and which are as follows:
  • Name: It’s obvious, isn’t it? Always right your name by yourself (Agent can misspell your name) and keep it in BLOCK letter so that it can be read easily. Though proposal form will also ask your father’s name in a separate column but write it with your name. Be sure that you give the exact name as it is in your bank account. Avoid any over writing at any place, especially in your name and if it happens any how just change the proposal form and use fresh one (Don’t hesitate to ask for new proposal form from you agent) to avoid any future problems.
  • Address: Normally you will have to give both current and permanent address, but people give their current residential address and write “same as current address” in permanent address column even if it is not. Make sure to provide both addresses if different. Provide full address with pin code so that all the correspondence from your insurer reaches you in time.
  • Contact No. and Email ID:¬† These are the fastest way of communication these days, so if you are in a transferable job then provide one permanent contact number which you will use always even if transferred, but also provide your email id because they will not change even if your shift abroad (May be I am wrong, reader’s discretion needed).
  • Date of birth (DOB): Your insurance premium will be based on your age, so write your DOB correctly with supporting documents. Always try to give your School certificate or passport or birth certificate (if life assured is child) as your supporting document as these are considered standard age proof, other documents can also be use as your age proof but with restrictions in Sum assured and term like driving license, PAN card, some age proof like voter card, Adhar card, and ¬†self-declaration will attract extra premium.
  • Nationality: Its very important because many insurers¬†don’t¬†provide life cover to NRI’s (in Indian perspective) living in¬†specific¬†countries, so be sure to provide correct information, and don’t hide that you are an NRI just to take insurance because it can lead to repudiation of your claim to your nominee if any thing happens to you outside India, But don’t panic if you are a resident, then you can roam anywhere without hesitation.
  • Plan and term: Its the scheme you wanted to take, write plan name ¬†and term carefully, without over writing, and¬†thoroughly go through the condition of the plan you want to take before proposing the same.
  • Nominee: Nominee is the person or persons who will receive the claim amount after you. Choose the right nominee in your insurance contract. Write correct and full name of your nominee as in his/her bank account. Write the name in BLOCK letter to avoid any misreading. Give correct age and relation. If in any case your nominee is minor then your have to provide the name of an appointee who is a major person who will take the claim amount of behalf of nominee until he/she is minor, else nominee will receive the claim if he/she became major. Though you are free to make anyone your nominee but making the nominee other than your legal heirs and blood relative could be seen as a Moral Hazard by your insurer and can deny you the insurance( Depend on upon the underwriting principles and guidelines of insurance company). It must be kept in mind that making anyone nominee doesn’t mean that money is for him/her, at any point of time legal heir of the Life assured can claim their right over that money.
  • Occupation, Income, and Education: The maximum life cover you can have to depend on upon your Income, so give right income. You have to give supporting of your income(ITR or CA certificate) with your PAN card no. if your annual premium is higher than 50K (Again in Indian perspective). Insurance cover also depends upon the nature of your occupation, if its too hazardous like aviation, army, ¬†police or other force jobs, mining (Under ground work) etc. then they will attract some extra loading on your premium (Purely depend on the underwriting criteria decided by the insurer). Always give the correct name of your employer if employed/salaried, because insurance companies give quite high risk cover to persons employed in Govt/PSU or reputed firms (where leave details are maintained by employer) without any medical examination. Provide correct details of education level, its very important in the case of female proposer because in India for females, different education level means different risk criteria.

proposal-form-is-a-contract

  • Heath details: Now these are the details which should be written carefully without any overwriting and only after reading the question asked, I have seen agents filling the form by themselves without asking anything from customer, so if it happens to you, just read the questions and their answers before signing the proposal form (But take a little headache and fill the form by yourself). Companies provide the insurance even if you are suffering some specific diseases/health problems, but only after medical examination and with some extra premium. So don’t hide anything related to your health or details related to any admission in the hospital for treatment, because you won’t suffer, it will be your spouse and children after your demise if your insurer rejects the claim based on your past health history. If the proposer is a female then provide correct details of your last menstrual date and last delivery date if asked in the proposal form.
  • Family History: Details about the age and health status of your parents, siblings, spouse and children. Give correct age and their health status and if anyone had already died then give the exact reason of death, because many diseases are hereditary. Two or more early deaths(especially by disease or suicide) in your family can be seen as a higher risk on your life
  • Other policy details:¬†Provide all your other policy details with the same or other insurer, policy details from same insurer will help the insurer to estimate their own risk on your life since policy taken within two-year are added with your proposed risk and medical examination and any special reports ¬†and underwriting decision will depend upon the cumulative risk in all the policies taken from same insurer within two year. Policies from other insurer are required for financial underwriting, means are you capable of depositing the cumulative premium in all policies from your given income? If the proposer is a female and if married then provide policy details of your husband too. If life assured is a child then provide all policy details of parents in the proposal form.
  • Signature and date:¬†Sign the proposal form at the appropriate place after carefully filling the proposal form and if filled by other person or agent then read all the details carefully before signing it. Give place of signing and date on which you are signing the proposal form. Since insurance, a long-term contract so use¬†the sign which you use always in future. Many companies provide the scanned image of your proposal form with policy bond, ask your agent about it and if not provide keep on a photocopy of your proposal form with you.
So its a legal document read it carefully, fill it clearly and sign it sensibly because it will always be your basis of the contract with an insurer, and you don’t want that your nominee will be denied for any claim in future.
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5 Comments on "Proposal Form: Basis of your insurance contract"

  1. most of the underwriting officer not known about proposal details(it pro have previous policy) the again asking ageproof,add, photo etc. let i no the laters circular.is there any new circular to get details or policy number is o.k

  2. joy03661papu@yahoo.co.in' joydeep choudhury | May 13, 2016 at 12:52 am | Reply

    Dear Sir,
    With due respects and humble submissions, I beg to state that I am a Development Officer working in a rural area called Bongaigaon Division in Eastern Zone of Assam and Western Meghalaya since 1999.
    Sir, I would like to know about Maturity Settlement Options of Maturity Claims. I use this as a Marketing tool and have very successfully used this to grow my business manifold. But Sir, the circular in this regard that I possess is that of 2005. Therefore, the Rates of Settlement option payable per Rs 1000 Maturity Sum Assured is different. I even fail to calculate the settlement options manually to reach the exact figures.
    I shall be highly obliged if you can send me the latest LIC circular in this regard and method to calculate Maturity settlement options manually at the present declared rate of 6 %. I shall also be pleased if you can send me the Latest Rates of Settlement Option payable per Rs 1000 maturity Sum Assured payable Yearly or Half Yearly for 2 to 10 years.
    My email address is joy03661papu@yahoo.co.in . I shall be extremely happy to hear from you. Here’s hoping that you will respond after reading mine. Have a blessed day Sir.
    Thanking you and expecting responses,
    Yours authentically,
    Mr. Joy deep Choudhury
    Development Officer

  3. joy03661papu@yahoo.co.in' joydeep choudhury | May 21, 2016 at 11:37 pm | Reply

    THANK U SIR

  4. raj58pathak@rediffmail.com' RAJIV KUMAR PATHAK | July 3, 2016 at 8:25 am | Reply

    Dear Sir,
    Due to respect I want to give me marketing tips for my progressive income. Ihave been working since 1992.
    Thanking u.

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