What is a Proposed Insured?
A proposed insured is the person whose life will be covered if the life insurance policy for which the policy owner is applying is approved by the insurer. Basically, if you want to buy insurance on yourself or someone else, the person you’re seeking to cover is the proposed insured until the policy becomes active.
When proposed insureds apply
Proposed insured isn’t a term you’ll hear often, and that’s because it’s only relevant for a relatively brief period. Specifically, an individual is a proposed insured while a life insurance policy on them is going through underwriting. Once the policy gets issued, the proposed insured becomes the insured.
Naming the proposed insured
When you apply for life insurance on yourself or someone else, the insurance company usually has you fill out a proposal form. This is a legally binding document that captures important details that will shape the policy, should the insurance company decide to issue it. And one of the most important pieces on that proposal form is the proposed insured, or the person you’re hoping to get this life insurance policy for.
If you’re buying life insurance on yourself, you can put yourself as the proposed insured without any issues. If you want to insure someone else, though, you’ll generally need to show that you have an insurable interest in them (basically, linked financial wellbeing) to get them from proposed insured to insured.