Difference Between Proposer and Insured in Life Insurance Policy

Understanding the meanings of certain specified terms while applying for an insurance policy is relevant. Two of the most significant ones you'll often come across are proposer and insured.

Alternatively, it can also be called policy holder or policy owner, and life insured. Proposer is the person who buys the insurance policy whereas insured is the one whose life, health or property gets covered by it. It is significant to know the difference between a proposer and insured to ensure proper insurance coverage and payment of premiums.

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

1. They decide significant aspects of insurance like the term of premium payment, coverage period, insured sum etc.
2. They decide the beneficiaries or nominees. If they take insurance for themselves, then they stay as their own nominee.
3. They make sure how payment will be made in situations like the death of the insured. It can be in EMI or lump sum.
4. They have an income source to make payments of premiums for life insurance.
5. They have the ability to cancel the policy if necessary.
6. While paying the premiums, they are also eligible for tax benefits.

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

Below are some of the benefits insured can avail of:

1. If the proposer meets with an untimely death but the insured stays alive, the policy still stays on force as long as the premiums are paid on time.
2. They can use this for future purposes in case of medical emergencies, paying off debts, children’s educational purposes, etc.
3. Proposer can be insured themselves in case of self-insurance. If, due to some unpredictable reason, insured faces demise, then assigned nominees will get the amount. Also in this case they attract death claim on policy as well.

Apart from this crucial distinction of proposer vs insured, there are other terms of relevance while opting for an insurance policy:

1. Nominee: Beneficiary is another term for the nominee. On the demise of the proposer, the amount goes to the nominee. Anyone, including your spouse, children, parents, etc., can be the nominee. You have to assign them while getting the insurance.

2. Insurer: The institution's representative who provides the insurance policies to the policyholders. They have certain parameters proposer should abide by while getting insurance. Moreover, they make sure that no risk is there while approving the policy.

3. Insurance Policy: A legal document that binds the policyholder contractually. It encloses the terms and conditions, declarations, beneficiary names and other details about the policy as written proof.   

4. Premium Payment: Money deposited by the proposer gradually during the insurance tenure. You can put it in a monthly, quarterly or annual pattern as per your choice.

5. Policy Tenure: The period of time that will cover the insurance taken by the policyholder. It varies depending on several terms and conditions posited by the insurer.

6. Maturity Benefit: The total amount of money the policyholder receives on completing the policy tenure after its maturity.

7. Death Benefit: It is the amount of money the beneficiary receives on the untimely demise of policyholder.

Whether you are a proposer or an insured, having a keen understanding of the insurance policy is necessary while buying insurance. Knowing the difference between proposer and insured will help you better grasp their roles and responsibilities. This will further enable to get a smooth idea of the terms and conditions placed while getting an insurance policy.