Provide accurate information in insurance proposal forms


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The period between January and March is the busiest for the insurance sector. People rush to purchase insurance policies to save income tax. However, the insurance proposal form remains a mere formality. Often a blank form is signed for the agent to fill later. This could be a costly mistake. Insurance laws allow an insurer to cancel an insurance contract, at its discretion, if the customer has not disclosed relevant information or if the information is incorrect.

For the insurer, the proposal form is a key document to assess the life being insured. Mistakes in filling these forms open up the possibility of customer servicing issues, incorrect product purchase and even claim repudiation. The general principles to be followed while filling proposal forms are to be accurate, unambiguous and complete.

Personal details

This section requires information on name, age, address and occupation. Though this requirement is routine, it is astonishing how many people get it wrong. For many insurers, around one in five customers cannot be contacted because of incorrect information in the form. These customers’ policies, product information and renewal notices remain undelivered. Such policies often lapse.

You can prevent these issues by:

• Providing a permanent address

• Providing your email and marking the insurer’s emails as “not spam”

• Providing your personal phone number and give one or two alternative contact numbers. Avoid office phones or temporary connections


There is more to a product than just its name. Product tenor, sum assured, payment terms and riders selected need to be specified. Customers often complain that they purchased a single-premium policy but were shocked when the insurer sent them a renewal notice after a year. This happens because the customer did not fill the form completely or left that to an adviser. Distributors and agents earn more from regular-pay policies than single premium where their commission is restricted to 2% of the premium. The unscrupulous adviser will log the policy as regular premium. A year later there is little recourse that a customer has because she signed off on the proposal form and did not point out the discrepancy within the free-look period.

Customers should leave no blanks in the product section. Advisers need to provide customers with a payment receipt. Make sure you have it particularly if you pay in cash.

Other insurance

Health insurance providers ask for details of other health insurance policies held by the customer because in a health claim each insurer is expected to pay its proportionate share of the claim. This does not impact you because insurers manage this process among themselves.

Life insurers also ask for details of other insurance policies held. The purpose is to verify that a customer is not over-insuring himeself relative to his income. Over-insurance suggests that you have not declared a known medical condition. If insurers detect this then your claim is likely to

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Provide accurate information in insurance proposal forms

  1. 1. SecureNow Published in Mint Dated 13 th December 2011 Click here
  2. 2. SecureNow Published in Mint Dated 13 th December 2011 Click here
  3. 3. SecureNow Insurance Broker Private Limited 3 rd Floor, 29 Hauz Khas Village, New Delhi 110016 Web – SecureNow