Understanding what the Proposer in Insurance is

Whether you are planning to buy a life insurance policy, or you already have one, it is important for you as well as your family members to know key terminology related to life insurance. This can help you with policy buying, claims, and several other related processes.

When browsing through insurance terminology, you may come across the term ‘proposer’. What is the meaning of proposer in insurance and how is it different from ‘the insured person’ under the plan? To begin with, it is the proposer who initiates the policy-buying process and manages it once the coverage starts. As this individual is the one ‘proposing’ to buy the life cover, they are called the ‘proposer’. Read on to learn more.

What Does it Mean to be a Proposer in Insurance?

The proposer in insurance refers to the individual who applies for the insurance policy. This person initiates the process by filling out the application form and providing personal and risk-related information. They must complete the process after reading through and agreeing to the terms and conditions set by the insurance company.

The proposer can also be considered the policyholder. It is the proposer who bears the responsibility to pay the life insurance premium. In addition, the proposer must also ensure that all declarations made during the application process are true and complete.

Roles and Responsibilities of the Proposer

The proposer of a life insurance plan holds several important responsibilities when it comes to the policy.

Providing Accurate and Complete Details

It is the responsibility of the proposer in insurance to provide accurate and complete information when applying for the policy. This includes not only personal details but also important health-related information like medical history, pre-existing conditions, and any past surgeries or treatments.

This information is used by the insurer to gauge the risk involved. Based on this, they approve the policy and decide the premium amount. In case of false or incomplete information, claims may be rejected, or the policy may even be cancelled.
Designating the Nominee

The proposer in insurance is responsible for choosing a nominee for the policy. A nominee is the person who will receive the policy benefits if the insured person passes away. Choosing the nominee is an important decision, as it ensures that the insurance payout reaches the right person, such as a spouse, child, or other family member.

The policy nominee can be changed as needed when the policy is in force. The proposer can update the nominee details whenever required.
Paying the Premium on Time

Another responsibility of the proposer is to make sure the life insurance premium is paid on time. This is important to keep the policy active and ensure continued coverage.

Missing payments can lead to a lapse in coverage, which means the life insured will no longer be protected. If the premium is not paid by the due date, the proposer must pay the premiums within the grace period as defined by insurers.
Managing the Policy

If there are any changes regarding the details of the life insurance plan, the proposer must inform the insurer about the same. This can include updating details such as a change of address, phone number, or email. Any critical changes in health must also be shared with the insurer. Keeping the insurer updated about these changes helps avoid issues when making claims.
Making Investment Decisions in Unit-Linked Plans

In investment-linked insurance policies, such as Unit Linked Insurance Plans (ULIPs), the proposer's role also includes making major financial decisions. They are responsible for making investment decisions, like choosing the funds where the premiums will be allocated, checking the fund’s performance, switching funds if required, and more. Hence, one must make sure they have sufficient financial knowledge before opting for investment plans.

Is There a Difference Between the Proposer and the Life Insured?

Let’s first understand the meaning of proposer and the life insured in insurance:

Proposer

The individual who purchases the insurance policy and who is responsible for paying timely premiums and other aspects of policy management.
Life Insured

The person whose life is covered under the policy. In the event of the life insured’s demise, the insurance company pays out the policy benefits to the nominee.

If the proposer is buying the insurance plan for themselves and insuring their own life, then the proposer and the life insurer can be considered the same. But if they are buying a plan for someone else, like a husband buying a policy for their wife, the two parties will be separate entities under the policy. Here, the wife will be the life insured, and the husband will be the proposer.

Here are some more differences:

Proposer in Insurance	Life Insured
Usually has a source of income.	Does not need to have a source of income.
In case of the proposer’s demise, no claim can be raised.	The life insured’s demise leads to a claim and the death benefit payout.
Can claim tax benefits as they are the ones paying the premium.	Cannot claim tax benefits if they are not the ones paying the premium.
Can assign themselves as the nominee.	Cannot be the nominee.

Can the Proposer’s Name be Changed in a Life Insurance Plan?

It is usually not permitted, as the proposer is the one who entered into the contract with the insurance company. Changing the proposer in insurance may lead to a new agreement.

However, it is allowed in certain situations.

If the policy is in the name of a minor, he/she can become the proposer once he/she comes of age.
A change may also be allowed if the proposer passes away. The name of the proposer in insurance may be changed to that of the life insured or the person specified in the proposer’s will.

It is advisable to consult with your life insurance company in India to understand the specifics related to proposer changes.

When it comes to life insurance, the proposer plays a vital role in initiating and managing the policy. Whether it is a whole life insurance, a term plan, or a ULIP, it is the proposer who ensures the policy continues as it should and that any changes are updated with the insurer. If you want to be the proposer of a life insurance plan, make sure you are aware of your responsibilities. Use tools like the life insurance calculator to get accurate premium estimates and ensure timely and affordable premiums.

by IndiaFirst Life
Headquartered in Mumbai, IndiaFirst Life Insurance Company Limited (IndiaFirst Life), with a paid-up share capital of INR 754.37 crore, is one of the fastest growing private life insurers in India in terms of New Business IRP in Fiscal 2023. Our key differentiators are our simple, easy-to-understand products that are optimally priced. As of Sept 30, 2023, we offered 30 retail products, 13 group products along with six riders (across retail and group portfolios), along with policies under the PMJJBY scheme, catering to protection, savings, health and retirement needs of our customers, leveraging multiple distribution capabilities and augmenting various investment options. In all propositions under the categories of Participating Plans, Non-Participating Savings Plans, Non-Participating Protection Plans, Unit Linked Insurance Plans, Group Protection Plans, Corporate Funds Plans, Riders & PMJJBY form a complete suite of offerings that help our customers prepare for the certainties of life. Our products are easy to understand and optimally priced with a developed comprehensive risk management framework/policy.