Difference Between Proposer and Insured in Life Insurance Policy

When you apply for an insurance policy, certain terms often need to be clarified. Understanding the meanings of certain specified terms while applying for an insurance policy is a good choice. It helps you understand your policy better. Two such significant terms are proposer and insured.

Proposer meaning in insurance can be understood in simple terms. The proposer is the person who buys the insurance policy, whereas the insured is the one whose life, health, or property gets covered by it. Knowing the difference between a proposer and an insured is significant in ensuring proper insurance coverage and payment of premiums.

Any person or business taking insurance for themselves or their loved ones goes by the term proposer in insurance. They are further known as policy owners and policyholders. The following are other roles the proposer is capable of doing:

• They decide on significant aspects of insurance, such as the term of premium payment, coverage period, and insured sum.
• They decide the beneficiaries or nominees. If they take insurance for themselves, they stay as their nominees.
• They ensure that payment will be made in situations like the insured's death. It can be in EMI or lump sum.
• They have an income source to make payments of premiums for life insurance.
• They may cancel the policy if necessary.
• While paying the premiums, they are also eligible for tax benefits.

In the simplest explanation, an insured is someone the insurance covers or holds the insurance policy. They also go by the name of the life insured. Proposers can buy it for themselves as well.

Below are some of the benefits the insured can avail of:

• If the proposer meets with an untimely death but the insured stays alive, the policy still stays in force as long as the premiums are paid on time.
• They can use this for future purposes, such as medical emergencies, debt repayment, and children’s education.
• If self-insurance is required, the proposer can be insured themselves. If the insured faces demise due to some unpredictable reason, then assigned nominees will get the amount. Also, in this case, they also attract death claims on the policy.
• The insured has financial security in case the proposer dies. Insurance ensures confidence that unexpected events won’t cause financial ruin. 
• Risk management becomes more manageable for those insured, providing them with long-term security.
• If the proposer is the primary breadwinner, the insurance can guarantee a temporary source of income replacement in case of any unfortunate event.