An insurance contract between a prospective customer and the insurance company must include a Proposal form, which is the most important and vital document.
It includes the customer’s necessary information like name, address, age, education, occupation, etc. It can also include the person’s medical history in some cases.
In order to establish that the prospective customer is not a robot, the proposal form is used to introduce the customer to the insurance company.
The proposal in insurance is the proposer’s request to the insurance company to provide risk protection.
Purpose of a Proposal Form
Following is a list of an insurance proposal form’s functions:
- It is the fundamental way that the insurer can get information about the risk that has been suggested.
- It also gives the insurer the ability to calculate the premium that must be paid for the transactional risk.
- The insurance contract is based on proposal forms, and all information provided by the insured is considered part of the agreement.
An Insurance Proposal’s Contents
Typically, proposal forms include three key sections: Personal Data, Subject-Related Information, and Insurance History Information.
According to the insurance company and the kind of policy being sold, proposal form specifications may change, nevertheless. A sample will be helpful for a prospective customer to review in order to properly understand the proposal form.
We’ll attempt to talk about the proposal form’s general contents, which include the following:
Name of the proposer is essential for identification as we are all aware. It should be written correctly and accurately for proper documentation purposes.
The address of the proposer should be accurately written in the proposal form because of several reasons like identity, communication, and risk assessment.
This is most useful in life insurance, and it should state where the proposer works and job specifications. The information gathered from here will influence the risk assessment of an underwriter.
This is the subject matter of the insurance policy and therefore, should be clearly stated to ensure the correct insertion can be made on the policy.
This is the limit of the insurance company’s liability on the policy. It must be a representation of the actual value of the subject matter.
It represents the amount for which insurance coverage is desired and should be mentioned accordingly.
Every proposal form has a declaration to the effect of the information given below;
- The answers stated in the proposal form are accurate to the best of the proposer’s knowledge, and information has not been concealed or misrepresented.
- The proposer will agree to pay the premium due and receive a policy that is issued by the insurance company for that class of policy.
- The proposal form together with the declaration shall form a part of the insurance contract.
The proposer is required to append his /her signature confirming the authenticity of every information stated in the proposal form
The date the name was signed on the form.