Once you have decided on what kind of insurance policy you want to opt for, a proposal form will be the foremost and basic document that will be filled to create a contract between you and the insurance company. This legal document is used by the insurance company to seek your personal information to understand you as a customer and for compliance purposes.
Besides basic details related to your identity like name, age, address and gender, the insurance company is seeking information that can help with the underwriting. Underwriting is a process to analyze a customer's eligibility for a particular insurance product.
In regards to the eligibility criteria of an insurance policy, the customer will have to give details related to their medical history and their occupation. Additionally, your age and gender also weigh in the computation of the risk factors for the company.
With this information, the insurer will decide how much amount can it provide as the 'sum assured' and the premium on the insurance cover that the customer will have to pay to avail the same.
One can seek the assistance of an insurance advisor to fill the proposal form. Information related to the medical history of family members may also be asked, especially if a genetically transferrable disease or deficiency runs in the family or if the members of the family are also covered under the policy opted for.
There are many insurance companies that ask the applicant to submit a medical check-up proof. The centre for the medical checkup may also be specified to make sure the results are not manipulated.
This is because, ideally, a person with a medical history is more likely to claim the policy, be it health insurance or life cover. Therefore, such customers are often charged a higher premium than say a younger healthier person who may never need it.
Income of the proposer may also be asked so that the insurer can ascertain their need for insurance and if the insurer can afford to pay the premium on time. The age is also relevant to ascertain the same.
With these details, the insurance company will be able to calculate all the risks associated with insuring the customer's life.
Lastly, the proposal form will ask for the nomination on the insurance policy. This is especially important in a life insurance where the details of the nominee have to be correct so that the benefit of the policy reaches the right person as per the customer's will.
The proposal form is also your chance to look at the finer print of the document policy before you sign and submit anything. Once the contract is formed, it will be hard to modify later. Further, it is wise to check all the related documents and fill in the details properly before submission. If you fill any details wrongly, your nominee will have a hard time claiming the benefit. It may also get rejected over a small spelling mistake.
It is highly recommended that you fill the form yourself rather than asking your agent to do it for you.