Proposal Form

A proposal form is the application document a buyer fills out when applying for an insurance policy, and it is the legal foundation of the contract that follows. In Indian insurance practice, every question on the proposal form — age, occupation, income, smoking status, alcohol consumption, existing illnesses, family medical history, prior policy rejections, hobbies, travel patterns, weight and height — becomes a contractual warranty. The insurer issues the policy based on the answers you gave, and those answers are treated as 'material facts' under the Insurance Act 1938.

If a material fact was incorrectly stated or omitted, the insurer can invoke Section 45 to challenge or deny a claim, though with important protections that kick in after three continuous years for life insurance. The proposal form comes in two broad flavours — the offline paper proposal filled with an agent, and the online proposal filled directly by the buyer on the insurer's portal or on an authorised web aggregator. Worked example: a 38-year-old buying a ₹75 lakh term plan with an annual premium of roughly ₹12,500 will typically answer 40-60 questions covering financial details, medical history, and lifestyle; a brief tele-underwriting call or a full medical check follows, depending on the sum assured and the answers disclosed.

A common misconception is that 'small' omissions — an episode of hypertension that resolved, an irregular ECG finding from five years ago, a 15-pack-year smoking history the buyer has since quit — do not need to be mentioned. In practice, Indian insurers cross-check claims against hospital records, pharmacy purchase histories, and earlier proposal forms filed with other insurers; an undisclosed pre-existing condition discovered at claim stage is one of the most common rejection grounds. Another common misconception is that the agent will fill the form accurately on the buyer's behalf.

The IRDAI has repeatedly circularised that the proposal form is the buyer's declaration, not the agent's, and any inaccurate answer attributed to 'the agent filled it wrongly' is still legally the buyer's disclosure. Always read the proposal before signing or clicking submit, and keep a signed copy. If a medical test result comes back with an unexpected finding — raised blood sugar, an incidental liver enzyme abnormality — disclose it at the earliest opportunity, even if the policy has already been issued, because a voluntary supplementary disclosure is viewed far more favourably than a discovery by the claims team years later.

Related: underwriting, Section 45 Insurance Act, material disclosure.