What is Importance of Proposal Forms in Insurance? [ Roles, Elements ]

When an insurance agent first approaches a client, he/she will present a proposal form. As a potential client, you will need to fill out this form truthfully. By completing/writing a proposal form, the insurer can then provide you with a list of benefits or coverage that the agent thinks you need.

In some situations, the information declared on the proposal form will make or break this business transaction. The proposal form will then serve as the backbone of the insurance policy that an insurance company offers. Agents are also often given the freedom to add/modify these forms to tailor a client’s needs.

The Role of the Proposal Form in an Insurance Agreement

Insurance companies devote their time in teaching their employees about effective proposal form writing and determining which clients are worth the risk or not. For example, if an agent is selling health insurance, he/she will let a client fill out health proposal forms. Information entered on these forms will help insurance underwriters determine the degree of risk they can bear (or not) if they allow the person to claim insurance benefits from their company.

The wording on the insurance agreements may vary depending on the specific need that a client wishes his/her insurance policy to address. Before agreeing to an insurance contract, you may ask for a sample printable proposal form that you can review beforehand.

Proposal Form: Basis of Your Insurance Contract

Insurance proposal forms will always ask for a client’s personal information like name, age, birth date, health history, employment information, habits, etc. All these information is used to create an assessment of whether or not you will be able to pay off the insurance and whether or not a person is likely to die, suffer illness/es, or meet accident/s.

Once an underwriter assessment is done, an insurance company is then able to create your insurance policy contract. This contract will include the benefits, coverage, contribution terms, and other rules and conditions regarding the insurance policy. The insurance contract will vary per person. For reference, you may view sample LIC proposal forms and contracts on this page.

10 Elements of Insurance Proposal Forms

There are different types of proposal forms like grant proposal forms, work proposal form, contractor proposal, and business proposal forms. But the elements that set insurance proposal forms apart are listed below:

• Name, birth date, age, marital status, current address and other basic personal information.
• Employment history and current occupation.
• Type of insurance policy that the client has.
• Any policy rider/s that the insurance policy may include. Insurance policy riders are additional specifications that benefits the insured. Often, these riders will also add to the cost of monthly insurance premiums.
• List of beneficiary/beneficiaries who will receive a payout if/when the insured suddenly dies. This usually applies to life and health insurance policies.
• Amount of month contribution that the insured needs to pay and when to pay it.
• The total amount of the insurance policy. This may refer to the total insurance benefit package that the beneficiaries of the insured may receive upon the death of the insured of upon the end of the insurance agreement’s term.
• Past and/or ongoing insurance policies that the client has/had.
• Affidavit that attests the client’s information to be true and correct. An insurance proposal form, once signed and dated, is considered a legally-binding document. Any false information written on the form may result to the voiding of the entire insurance contract.*** Please write 200 words (2 Questions) here***
• Prospective client’s signature and date that the insurance policy has been signed.