Proposer In Insurance

Proposer In Insurance

The term "proposer" refers to the individual who obtains the policy, either for themselves or a third party.

Written by : Anamika Arora

Reviewed by : Jasmeet Bedi

Jasmeet Bedi

2022-12-05

461 Views

7 minutes read

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Insurances are a type of contract between two or more parties in which one party agrees to pay the other party a sum of money in exchange for protection against a specified loss. The party paying the amount is the insured, while the party receiving the premium is the insurer. The contract is typically between an insurance company and an individual or business.

Table of Content

Meaning of Proposer in Insurance

A proposer is an individual who applies for insurance coverage. The proposer signs the insurance policy and is responsible for paying the premiums. The proposer may propose to get themselves insured or another person in whose life they have an insurable interest.

The simplest proposer meaning is the party who initiates the insurance contract by submitting a written application to the insurer. The proposer must disclose all information about the risk being insured to the insurer, which the insurer then uses to determine whether to accept or reject the risk. If the insurer accepts the risk, it will issue a policy to the proposer.

Example: If you buy a term insurance policy for yourself from Canara HSBC Life Insurance, you are the proposer as well as the insured, whereas Canara HSBC would be the insurer.

Why is Proposer Important in Insurance?

A proposer is important in insurance because the insurance company will use the information provided by them to decide whether or not to provide coverage. The proposer must provide accurate information about themselves and their risk factors for the insurance company to determine if they are a good candidate for coverage.

The role of the proposer in insurance is to complete and submit an insurance application to the insurer. The insurer will then use the information provided by the proposer to assess the risk of insuring the individual or business. If the insurer decides to offer insurance coverage, the proposer will be required to pay the premium.

Who can Propose Insurance?

Any individual or business entity with an insurable interest in another person can propose that the risk be covered by an insurance company. Insurable interest implies financial loss on the unfortunate, untimely demise of the insured.

For example, If a son or daughter is the lone earning member and the parents are financially dependent on them for survival, the parent has an insurable interest in the life of their son/daughter. Similarly, a homemaker has an insurable interest in her husband’s life if he is earning. An organisation has an insurable interest in the lives of its key employees.

 

Did you know?

The term "proposal form" refers to a document that the insurer's proposer must fill out to provide all relevant information requested by the insurer regarding a risk.

Source: IRDAI

Claim Settlement Ratio

Is the Proposer different from the Insured?

To understand who is a proposer in insurance, it's crucial to understand it parallel to the insured. The proposer and the insured are usually the same person, but they can be different. The proposer is the person who signs the insurance proposal form and is, therefore, the person proposing to buy the insurance. The insured is the person or people covered by the insurance policy.

The proposer pays premiums to the insurance company in exchange for the insurance company's promise to pay benefits to the insured in the event of a covered loss.

Here’s a summary of the differences between the proposer and the insured if both are different persons:

Proposer in Life InsuranceInsured in Life Insurance
Proposes the insurance cover and premiumCovered by the insurance
The proposer’s death does not attract a death claim on the policyThe Insured’s death attracts a death claim on the policy
Proposer must have an insurable interest in the insured’s lifeThe proposer’s death does not attract a death claim on the policy
Proposer must have a source of incomeInsured does not need a source of income
The proposer will claim the tax benefits on the premium paymentsInsured cannot claim tax benefits for the policy premiums
The proposer is not entitled to the maturity benefit from the life insurance policyThe insured can claim the maturity benefit from the life insurance if they survive the policy term
Proposer can be a nominee in the policyInsured cannot be a nominee in their policy

Can you Change the Name of the Proposer?

Proposer is the owner of the policy. Ergo, if the proposer and the insured are different individuals, ownership can be transferred only upon the death of the proposer. The proposer should have assigned a new owner in his will before death. If you are wondering how to change proposer name in health insurance, here is what you can do:

The name of the proposer can be changed in an insurance policy by contacting the insurance company and requesting a change. The insurance company will then require certain documentation to process the change, such as a new application with the updated information.

A proposer is an individual who takes out a life insurance policy on another person's life. The proposer is the policyholder and the insured is the person whose life is covered by the policy. The proposer pays the premiums and is the beneficiary of the policy unless listed otherwise.

If you are a proposer, make sure you understand the different types of life insurance policies before you begin shopping for a policy. Try to understand the terms and conditions of the policy you're considering before buying it.

Summing Up

Being the primary source of information for the insurer, the proposer plays a crucial and significant role in the life insurance industry. This individual is responsible for the policy application's approval and issuance. Once you realise this, obtaining life insurance becomes a simple process overall. 

Glossary

  • Network Hospital: Hospitals that have a tie-up with the insurer for cashless treatment.
  • No-Claim Bonus: A discount on premiums for not making any claims during the policy term.
  • Claim Settlement Ratio: The percentage of claims settled by the insurer out of the total claims received.
  • Policy Schedule: A document detailing the specifics of the insurance coverage, including the sum assured, premium, and term.
  • Third-party Administrator (TPA): An intermediary between the insurer and the insured for processing claims.
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FAQs Related to Proposer in Insurance

If the proposer in a life insurance policy dies before the policy is issued, the policy will not be issued and the premiums will be refunded to the beneficiaries.

After the policy is issued: If the proposer is also the insured person, the beneficiary receives the sum assured after the proposer’s death. But when the proposer and insured are different, the nominee in the proposer’s will becomes the new policyholder.

The proposer is the policyholder who pays premiums to keep the policy in force. They can access any data related to the policy and can claim tax benefits, under Section 80C of the Indian Income Tax Act, on the premiums.

If the proposer and insured person are the same, the benefit amounts would be paid to tem. If these are different, the benefits are paid to the beneficiary as nominated by the proposer.

Yes, the proposer can also be the nominee of the same policy. For example, if you purchase a policy for your spouse or parent, you (being the proposer) can also be the nominee.

In the event that the proposer of a life insurance policy passes away before to the policy's issuance, the policy will not be issued and the beneficiaries will receive a refund of the premiums. Following the policy's issuance: Should the proposer also be an insured individual, the beneficiary will be paid the entire assured amount upon the proposer's passing.

When the insurance company accepts a proposer's insurance proposal, the proposer pays the first premium and receives the insurance policy document, they become policyholders. Assuming they continue fulfilling their responsibilities, such as paying premiums, the proposer is then referred to as the policyholder for the duration of the policy term.