A Proposal form is the most essential and fundamental document required for an insurance contract between a prospective customer and the insurance company. 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
The proposal form is used to introduce the customer to the insurance company, confirming the identity of the prospective customer to ensure he is not a robot.
The proposal in insurance is a request from the proposer to the insurance company to give protection against risk.
Purpose of a Proposal Form
The uses of an insurance proposal form can be summarized below;
- It is the basic means by which the insurer can access information regarding the risk proposed.
- It also enables the insurer to determine the premium payable on the risk involved in the transaction.
- Proposal forms are the basis on which the insurance contract is based, and all information given by the insured forms part of the agreement.
Content of an Insurance Proposal
Typically, proposal forms contain three main sections; Personal Data, Information relating to the subject matter and information about insurance history.
However, proposal form requirements may vary depending on the insurance company and the type of policy being sold. For a proper understanding of the proposal form, a specimen will be a useful study for a prospective customer.
We will try to discuss the contents of the proposal form in general, and they 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 cover is desired should be mentioned accordingly.
Every proposal form has a declaration to the effect 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