Proposal Form

Definition of Proposal Form

A proposal form is a formal application document that an individual fills out when applying for an insurance policy. This form is used by insurance companies to gather detailed information about the prospective policyholder. It plays a crucial role in the risk assessment and underwriting process of insurance.

Components of a Proposal Form

Typically, an insurance proposal form includes the following sections:

• Personal Information:
  This includes the applicant's name, age, gender, occupation, and contact details.


• Policy Details
  The applicant specifies the type of insurance policy they are applying for, the term of the policy, and the sum assured or coverage amount.


• Health and Lifestyle Information:
  For life and health insurance, the form usually includes questions about the applicant's health history and lifestyle habits such as smoking or drinking.


• Additional Information:
  Depending on the type of insurance, the form may ask for other details. For example, a car insurance proposal form would include details about the vehicle.


• Declaration and Signature:
  The applicant must declare that the information provided is true and accurate. The form must be signed and dated.

Importance of Proposal Form

The information provided in the proposal form serves as the basis for the contract between the insurance company and the policyholder. This is why it's critical for applicants to provide accurate and complete information.

Misrepresentation or omission of important information in the proposal form can lead to complications, such as denial of claims or cancellation of the policy, especially during the contestability period. On the other hand, providing accurate information helps ensure that the insurance coverage is adequate and appropriate for the policyholder's needs.

Proposal Form in the Indian Context

In India, the Insurance Regulatory and Development Authority (IRDAI) has standardised proposal forms for certain types of insurance to ensure consistency and transparency. Nevertheless, insurance companies may have their own specific proposal forms depending on the type of policy. It's advisable for applicants to read the form carefully, understand all the terms, and seek professional advice if needed before filling out and submitting the form.