Proposer In Insurance

Different Parties in an Insurance Policy

Life insurance is a deal between the insurer and the proposer to offer financial security to the beneficiary on the death of the life assured. Let’s break each of these aspects into individual components to help you understand better.

• Proposer - He/she applies for the life cover and pays the insurer premiums for the same.

• Insurer - This is the insurance company that will offer the life cover.

• Life assured - This is the person whose life the insurance policy will cover.

• Beneficiary - This is the individual who shall receive the death benefit on the death of the life assured.

This article discusses the proposer in detail.

Who is a proposer in insurance?

The proposer is the policyholder or the owner of the life cover. He/she pays premiums against the desired coverage to keep the policy in force. Having complete ownership of the life cover, he/she can access all information related to the policy and make changes to it if necessary. Furthermore, they can claim tax benefits on the premiums paid under Section 80C of the Income Tax Act of India, 1969.

Disclaimer - The tax benefit is subject to changes in tax laws. *Standard T&C Apply

Difference between Proposer and Life Assured

The proposer can either buy the policy for themselves or for another person with an insurable interest. In the first case, the proposer becomes the life assured. In the second case, the person with an insurance interest becomes the life assured. In both cases, however, the premiums are paid by the proposer.

What does the proposer do?

• Fill out the proposal form and purchase the policy from the insurer.

• Decide important aspects of the life cover such as the sum assured, coverage period, premium payment term, etc.

• Decide how the maturity or death benefit payout shall be made viz. in lump sum or in periodic installments.

• Assign beneficiaries who shall receive the payouts following the death of the life assured.

• Change beneficiaries or policy terms.

• Pay premiums for the policy.

What happens if the proposer dies in life insurance?

If the proposer is the life assured under the policy, the assigned nominees will receive the benefit on his/her death. If the two are separate individuals, ownership shall be transferred to the legal heir mentioned in the will of the proposer.

Can the proposer be changed?

The proposer holds the ownership of the policy. Therefore, if the proposer and the life assured are different individuals, ownership can only be transferred upon the death of the proposer. Usually, the proposer will have assigned a new owner in his will prior to death. For this purpose, you can fill in the insurer’s ‘change in ownership’ form and transfer it to the life assured. If the life assured is a minor, the newly assigned proposer shall hold the ownership of policy till the child comes off age.