The All-important Proposal

By Author: Norris Rios
Total Articles: 572
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When you are looking to insure your vehicle or the contents of your home, this is a short-term, relatively casual transaction. Many people move their cover from one insurance carrier to another as they change vehicles or move home (or as premium rates go up too much). Because both sides accept these forms of insurance are more flexible, the process of making and canceling the policy are straightforward. The protection for the insurer is that, if you are less than honest when you give the outline details of who you are and what you want to insure, the insurer can cancel the policy and leave you without cover. Obviously, if you think the insurer is canceling without a good reason, you can complain to the Insurance Commissioner for your state or sue. It's expensive to sue but, if the court agrees with you, the remedies are strong.

When it comes to insuring your life, however, you are talking about a long-term commitment. You will hold this policy no matter where you live. More importantly, if a claim is made, you are not around to complain or sue. So, before you enter into the agreement, both sides need to make absolutely ...
... sure there are no problems that will affect the policy as and when it falls due for payment. The start to the process is competing the proposal form. All the information you give will form the basis of the contract with the insurer. Everything must therefore be accurate. If you find long forms intimidating, you can ask for an agent to help.

It starts with the basics of your name, address, age, education, and employment records which includes evidence of your current pay - the company wants some comfort you are taking on a financial commitment you can afford. This begins the process of assessing who you are as a person and estimating life expectancy. The basic information is followed up with information about your own health and the health of your immediate family. Finally, there are a range of questions about your lifestyle. Now comes a strategic decision. You can submit additional information to the company without being asked. Remember the insurer can cancel the policy if it later turns out there was significant information you could have disclosed. You have to decide what the company needs to know to take a fair decision on whether to insure you. If there is anything that would affect the company's assessment of the risks, you should disclose it.

When the form and any additional information is complete, you sign the form and send it off. If the company agrees in principle to offer you insurance, it will send you a copy of the proposal form and ask you to check through it for accuracy. This is done for two reasons. First, it gives you a last chance to make any disclosures. Second, it allows you to check no one has changed any of the information. Sometimes, other people alter the information on these forms as a first step to defrauding your family. Life insurance requires great care on both sides. Read the life insurance policy sent with the form. Only if the form is accurate and you agree to the policy should you go on.