What is a proposal form, and what counts as a 'material fact'?

The proposal form is the application in which you give the insurer the information it asks for, so it can decide whether to cover you and on what terms. Under IRDAI's 2024 regulations, material information means the important, essential and relevant information and documents the insurer explicitly asked for in that form, and the duty of disclosure applies to both you and the insurer. For life insurance, Section 45 of the Insurance Act limits when non-disclosure can be raised and puts the burden of showing materiality on the insurer.

IRDAI's 2024 regulations define the proposal form as a form filled in by the prospect, on paper or electronically, giving the information the insurer requires about a risk, including material information, so that the insurer can decide whether to accept the risk and on what rates and terms. Unless exempted, a proposal for insurance must be evidenced by a proposal form.^[1]

What counts as material

The same regulations define material information as all important, essential and relevant information and documents explicitly sought by the insurer in the proposal form, and they say the requirement to disclose material information applies to both the insurer and the prospect.^[1]

That puts the questions on the form at the centre of any non-disclosure argument: what exactly were you asked, and what did you answer? Keep the form you signed, and if a question was never asked, check whether your policy wording separately required you to disclose the point.

In life insurance: Section 45

• After three years: Under Section 45 of the Insurance Act, no life policy can be called in question on any ground after three years from the latest of issue, risk commencement, revival or rider date.^[2]
• Materiality must be shown: Within three years, a fact counts as material only if it has a direct bearing on the risk, and the onus is on the insurer to show it would not have issued the policy had it known.^[2]
• Silence is not fraud: Mere silence about facts likely to affect the risk is not fraud, unless there was a duty to speak or the silence amounted to speech.^[2]
• The agent's role: A person who solicits and negotiates the contract is deemed to be the insurer's agent for forming it — which can matter where an agent filled in the form.^[2]
• Refund of premiums: If a policy is repudiated for misstatement rather than fraud, premiums collected up to the repudiation must be repaid within 90 days.^[2]

In health insurance

IRDAI's CIS format asks you to disclose all pre-existing diseases or conditions before buying, and warns that non-disclosure may affect claim settlement. One insurer's wording makes the policy void, with premium forfeited, for misrepresentation, mis-description or non-disclosure of any material fact. After sixty continuous months of cover, though, the moratorium bars the insurer from contesting the policy or a claim for non-disclosure or misrepresentation, except established fraud.^{[3, 4, 5]}

Practical steps

1. 1

   Get your copy of the form

   The insurer must give you a copy of your proposal form with the policy document within 15 days of accepting your proposal.^[3]

2. 2

   Check it as soon as it arrives

   If an answer was recorded wrongly, ask in writing for it to be corrected — see correcting your policy.

3. 3

   If the insurer alleges non-disclosure

   Compare the exact question with your answer and with the date of any diagnosis. Health non-disclosure and Section 45 for death claims explain the arguments.^[2]

ClaimAssure is an independent private platform. It is not an insurer, IRDAI, Bima Bharosa or the Insurance Ombudsman, it never files anything on your behalf, and it cannot promise any outcome. What it does is read your documents and show you what they say.

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