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We all know that safeguarding women’s rights and interests have always been crucial in any society. The Married Women’s Property Act (MWP Act), 1874, was also enacted for similar reasons.
Most people believe that buying a life insurance policy will ensure the well-being of their family, spouse, and children in case of their unfortunate demise. But what if you have significant unpaid debts left behind you? This is where the MWP Act in insurance comes into play - to protect the financial rights of your wife and children.
Now you must be thinking about what is MWP Act, how it will help in safeguarding your wife and children, etc. Let’s understand in detail what the MWP Act is, its pros & cons, and how it secures your family.
The Married Women’s Property Act (MWP Act) is an Act that states that an Indian married woman’s earnings are her own property. This act is included in the life insurance policy bought by any man and mandates that the money received by the wife from the policy is her property and cannot be used to repay the husband’s liabilities.
Under the MWP Act in insurance, only your wife and children can lay a claim on the policy proceeds. No other relative, heirs, or creditors can stake a claim on the money. When compared to other policies, the creditors can claim the money from the proceeds if you have debts and loans to your name. But under the MWP Act, the rules are different. Even though you may have debts, your family would be financially secure.
For example, as an individual breadwinner for your family, suppose that you are a salaried employee with a home/personal loan or a business owner with debts. In the case of your demise, your creditors and lenders will have the first claim on the proceeds of your term life insurance policy. This will leave your family, wife, and children financially unstable.
However, when you buy the policy under the MWP Act, then only your wife and children will be able to make claims on the policy process of your term insurance. The nominees mentioned in the MWPA insurance remain unchanged for the whole policy tenure.
Additionally, this is a great tool to empower the claims of your wife and children on the proceeds, even if there are other factors that could have influenced the proceeds of the sum insured, like a joint family setup and other outside factors.
Any salaried individual can buy a term insurance policy under the MWP Act. If you are a widower or a divorcee, you can still name your children under this Act. You can nominate only your wife and children, and no other family member or heir would be able to lay a claim. But the beneficiary cannot be changed later even if you end up divorcing your wife.
Buying your term insurance plan under the MWP Act, 1874 is quite a simple process.
The MWP Act India allows you to buy a term plan that covers the financial requirements of your family in case something unfortunate happens to you. The nominees under the Act can be:
When you are buying the policy under this Act, you can also add trustees. According to the MWP Act in insurance, the trustees can be multiple people, including any of your nominees or a financial institution/bank. It is not mandatory to include any trustee in the form, and you can change the trustees at any time. If you choose to have trustees, then you have to provide proof of their consent along with the insurance form papers.
Mr. Roy had bought a term insurance plan under the Married Women’s Property Act in India and added his wife and children as nominees. When he had suddenly passed away, the lender of his home loan demanded that their dues are paid using the sum assured received from the term insurance policy. The case was taken to court, and the verdict was given in favor of the family. The MWP Act made sure that the wife and the children receive the money.
The purpose of the term insurance plan is to financially protect the family after the policyholder’s death. The MWP Act, 1874 ensures that even more effectively.
No, you cannot assign someone else or take a loan against the policy if your insurance plan is covered under the MWP Act.
Yes, you can surrender the policy, but it has to be signed by the beneficiaries. The proceeds of the policy will be given to the policyholder for the benefit of the beneficiaries.
No, you cannot change the beneficiary once you have opted for one already under the MWP Act.
In the event of your wife’s death, your legal heir will receive the proceedings of the policy. But it is recommended to nominate more than one beneficiary.
Yes, you can have more than one insurance policy under the MWP Act, but they have to be registered separately under the Act.
No, your parents cannot be nominated as the beneficiary. The MWP Act only covers your wife and children.
No, you cannot assign an existing insurance policy under the MWP Act. If you want to assign any policy, it has to be done at the time of purchase.
Now that you know and understand MWP Act, it is time that you ensure that the term insurance policy you are planning to take has these clauses mentioned. This way you can ensure that your wife and children rightfully get the process of your life insurance. Not only that, these proceeds will help your wife and children sustain a stable financial life.
- A Consumer Education Initiative series by Kotak Life
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