To understand the insurance policy document, it is essential to know the meaning of several terms of life insurance. Some terms used for individuals under a life insurance policy are the insured, the proposer, the insurer and the beneficiary. Read ahead to know the meaning of the terms to make informed decisions while buying a policy.
Proposer in Insurance
The proposer is an individual who proposes to initiate a life insurance policy with the insurance provider. The person either buys the policy for himself/herself or for another individual in whom the person has an insurable interest.
So, a proposer is a person who submits the request for life insurance coverage. The proposer is also called a policyholder and is liable to pay premiums. To better understand the meaning of proposer, you should also know the meaning of the following terms:
Insured/life assured: Life assured is the person covered against risks by the insurance policy.
Insurer: The insurer is the insurance provider for the life of the insured. The insurer analyses the risks, offer coverage and pay out the claims.
Beneficiary: The beneficiary is the receiver of the death benefit of the insured.
What is Insurable Interest?
Insurable interest implies that the proposer of the policy either gains from the survival or suffers a financial loss due to the death of an insured person. For example:
A housewife may have an insurable interest in her spouse.
A dependent father may have an insurable interest in his son.
An employer may have an insurable interest in the employees.
The Difference Between Proposer and Life Assured
The proposer and the insured in a life insurance policy are either the same or different individuals. The proposer is the applicant, owner and payer of premiums under a policy. Whereas insured or life assured is the person whose life is covered. Thus, the proposer doesn’t need to be insured under the policy purchased.
For example: If you buy a policy in your name, you are the proposer and the insured. But, if you wish to purchase a policy in the name of your spouse or child, you are the proposer, while the spouse/child will be the insured. But it is you who will bear the cost of the policy in both cases. So, the proposer handles the premiums under a life insurance policy irrespective of the insured.
What is the Role of the Proposer in Insurance?
The proposer is the essential person under a life insurance policy who plays the following roles:
Initiates the policy purchase by filling out the proposal form.
Decides the coverage, premium, sum assured, etc., for the life insurance policy.
Decide the names of the beneficiaries under the policy.
Pays the premium for the life cover.
Can change the name of the beneficiary or other aspects of the life insurance.
Can cancel the policy.
Proposal Form in Life Insurance
Once the proposer decides to purchase a life insurance policy, he/she has to fill out the proposal form. A proposal form is one of the essential documents in life insurance. It helps the insurer to seek information about the life assured.
Apart from details about age, name, gender, address, etc., a proposal form asks about the medical history, income, and occupation of the insured person. The details provided are used for underwriting by the insurance company. Underwriting is the process under which the insurance company assess risks and eligibility for life insurance cover.
Change of Proposer Name In Insurance
The proposer in life insurance can be changed when the proposer dies, or the insured minor turns 18 years old. This is when the insured and the proposer are different individuals. Upon the proposer’s death, the policy’s ownership is usually transferred to the life assured or the person named in the proposer’s will. To make changes in the ownership, a “change in ownership” form has to be filled out to inform the insurance company about the new owner of the policy.
Important Questions Related to the Proposer in Insurance
What if the policy proposer dies in life insurance?
If the proposer is the insured person under a policy, the beneficiary receives the policy benefit after the proposer’s death. But when the proposer and insured are different, the person in the proposer’s will becomes the policyholder.
Who claims life insurance tax* benefits?
In the case of insurance for self, the insured person pays the premiums and claims the tax* benefits. The insurance proposer can also claim the tax* benefits if the policy is bought in the name of another person.
Why is life insurance essential?
So, if you are concerned about what might happen to your loved ones after you, buying a life insurance policy is the solution. A life insurance policy takes care of your loved ones in your absence and offers the following benefits:
Provides death benefits in the form of a lump sum or regular payments.
Provides financial stability.
Helps your family pay off debts.
Helps meet the wedding or educational expenses of your loved ones.
Offers retirement benefits.
Offers tax* benefits.
Conclusion
Now you know about the proposer’s details in insurance and the benefits of a life insurance policy. So, you must consider buying a suitable life cover for yourself or your loved one.
To secure your family’s future and fulfil your dreams, Tata AIA Life insurance has brought a range of life insurance plans. With several riders#, you can tailor the life insurance policy plans, such as term plans, according to your needs. You can also select the payment option between single, limited or regular. So, buy life insurance online with Tata AIA and provide protective financial cover to your loved ones.
L&C/Advt/2022/Jul/1648