Proposal is declined

It is a situation of refusal to cover a proposed life. This can happen on account of a variety of reasons. The risk on the proposed life may be too high that it cannot be covered through an extra premium, a lien, a reduction in sum proposed, offer of a different Plan and term etc. It is likely that the policy may end up as a death claim during the term of the policy. If on inquiry it is found that the proposer is an alien enemy (with whom no contract is permitted) the proposal has to be declined. Country A is at war with country B then A regards people of B as alien enemies and vice versa. A and B were in good relations   and citizens had free entry to both the countries. During such a situation relations get spoiled on some ground and war erupts. Citizens of the other country who were welcome earlier suddenly become alien enemies. A proposer who could not produce satisfactory residence proof or income proof also gets his proposal declined by the insurer. Declining of proposal depends not only on the risk factors alone but also on account of the legal system of the country where the proposal is submitted. In India for example ‘insurable interest’ is a sine qua non of life insurance. So if the proposal is submitted by some one on another life on whom he has no insurable interest it deserves to be declined [please refer the Post on Insurable interest]. High moral hazard can also lead to declining of insurance proposal.