(a)(i) What is a proposal form? (ii) List four general questions that are contained in a proposal form. (b) List and explain three documents used in effecti...

Answer Details

(a)(i) What a proposal form is

A proposal form is the printed document supplied by the insurer which the intending insured (the proposer) completes and signs to apply for insurance cover. It contains a set of questions through which the proposer supplies all the material facts about himself and the subject matter of the insurance. The information given forms the basis of the contract, enabling the insurer to assess the risk, decide whether to accept it and fix the appropriate premium.

(a)(ii) Four general questions contained in a proposal form

1. The full name and address of the proposer.
2. The age, sex and occupation of the proposer.
3. A description of the subject matter to be insured and the sum to be insured (its value).
4. Details of previous insurance and claims history, including whether any insurer has ever declined, cancelled or refused to renew a policy.

(Other acceptable general questions: the period of insurance required and a declaration that the answers are true.)

(b) Three documents used in effecting insurance contracts

• Proposal form: As explained above, it is the document by which the proposer formally applies for cover and discloses the material facts on which the insurer bases its decision. It represents the offer stage of the contract.
• Cover note: A temporary document issued by the insurer to confirm that cover is in force pending the preparation of the full policy. It gives the insured immediate protection and states the main terms, remaining valid for a short period (often 30 or 60 days) until the policy document is ready.
• Insurance policy (policy document): The formal, legal contract between the insurer and the insured. It sets out in detail the names of the parties, the subject matter, the risks covered, the sum insured, the premium, the period of cover, the exclusions and the conditions. It is the conclusive evidence of the terms of the agreement.

(The certificate of insurance and the premium receipt are also acceptable documents.)