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Features
Ref. No. KLI/22-23/E-BB/492
The Married Women Property Act (MWP Act) in India protects married women and their children by ensuring life insurance proceeds are separate from the husband’s estate. This prevents creditors or family disputes from claiming the policy's benefits.
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? What will happen if the creditors take away all the policy money? It is where the MWPA in term insurance comes into play.
Purchasing term life insurance under the Married Women’s Property Act (MWP Act) in India offers several unique and valuable benefits for your family’s financial security, particularly protecting your wife and children. The MWP Act creates a separate estate for the insurance policy, independent of your other assets. It means no family members or relatives can challenge the death benefit, guaranteeing its rightful passage to your designated beneficiaries.
The Married Woman Property Act (MWP Act) is an important law that protects the financial interests of a married woman. Section 6 of the Act considers any life insurance policies taken by a married man for the benefit of his wife and children as a trust, which is separate from his estate. This means that:
This provision’s core benefit is providing financial security to the wife and children. It ensures that they are supported through the insurance policies, regardless of any financial difficulties the husband might face. In other words, it mandates that the money received by the wife from the policy is her property and cannot be used to repay the husband’s liabilities.
For example, Mr. Roy bought a term insurance plan under the Married Women’s Property Act in India and added his wife and children as nominees. After his unfortunate demise, his lenders demanded that their dues be paid using the sum received from the term insurance policy. However, since Mr. Roy bought the plan under the MWP Act, the case was taken to court, and the verdict was given in favor of the family, making his wife and children financially secure. The MWP Act India ensured the wife and the children received the money.
The MWPA in insurance protects your family in several ways, mainly focusing on financial security and safeguarding your wife and children:
In the unfortunate event of your death, any outstanding debts or loans you may have, cannot be claimed against the life insurance policy if covered under the MWP Act. the policy ensures the entire sum assured goes directly to your designated beneficiaries (usually wife and children), protecting them from creditors and financial hardship.
The MWP Act in term insurance creates a separate estate for the insurance policy, independent of your other assets. It means the death benefit cannot be contested or challenged by family members or relatives, like in-laws or creditors, guaranteeing its rightful passage to your designated beneficiaries. It acts like a separate inheritance path for your family.
Even if you get divorced, your designated beneficiaries (usually wife and children) remain entitled to the policy proceeds. The Act ensures the policy remains separate from any marital settlements or agreements, providing financial security for your family even after separating.
The MWP Act empowers women by ensuring their financial security and independence in case of their husband’s death. It is particularly crucial when family dynamics or traditional practices might otherwise compromise their well-being. The wife receives the money directly, giving her agency to manage family finances.
One of the most effective ways to mitigate financial risks and ensure peace of mind is by purchasing insurance. While insurance policies are available through various channels, one option that stands out is buying insurance with the MWP policy. Some other essential benefits of buying MWP are as follows:
A life insurance policy is not automatically covered under the MWP Act. This is why the MWP Act Addendum becomes essential. To bring a policy under the Act’s protection, you must complete the MWPA addendum form at the time of purchasing a new policy. The addendum can only be submitted for a new policy purchase and cannot be submitted for existing policies.
Once the addendum is submitted, the policy proceeds are legally protected from claimants and reserved solely for the designated woman beneficiary. Even parents cannot claim these benefits. There are two versions of the addendum, one for male policyholders and another for female policyholders, each requiring the appropriate form to be filled out.
The MWP Act India allows you to buy a term plan that covers your family’s financial requirements in case something unfortunate happens to you. The nominees under the Act can be:
Beneficiaries under the MWP Act cannot be changed even in case of divorce. In the event of the beneficiary’s death, their legally appointed heir can claim the insurance payout. For this reason, listing multiple beneficiaries under the MWP Act when purchasing a policy is essential.
When 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. Including any trustee in the form is optional, and you can change the trustees at any time.
Buying your term insurance plan under the MWP Act 1874 is simple.
Assess your family’s financial needs, including liabilities, future goals, and living expenses, to determine an appropriate sum assured. The chosen coverage should meet these needs even in your absence.
Complete the insurance application form accurately, providing all necessary personal and financial details. Disclose any pre-existing medical conditions, as non-disclosure may lead to claim rejection.
While filling out the nomination form, clearly state that the policy is taken under the MWP Act, 1874, and mention the names of your wife and children as the beneficiaries. Consult with your insurance advisor to ensure the nomination process is correctly executed.
Choose a premium payment frequency (monthly, quarterly, annually) and pay the premium as per the selected mode. Ensure you understand the grace period for premium payment and adhere to it to maintain the policy in force.
Thoroughly review the policy documents and their terms and conditions. Verify that the policy clearly states compliance with the MWP Act of 1874 and that the nominated beneficiaries are correctly mentioned.
Inform the insurance company promptly about any change in personal details, such as marital status, address, or contact information. Keep the policy up-to-date to avoid any complications during the claim settlement process.
In general, anyone seeking a financial safety net for their family should buy life insurance under the MWP Act. However, the Act is particularly beneficial for the following categories of individuals, as it creates a legal shield for their families amidst financial risks:
It is important to note here that regardless of who is buying the policy, a trustee who is above 18 years of age should be added to the policy. The trustee manages the policy and its maturity proceeds per the policy terms.
The Married Women’s Property (MWP) Act of 1874 in India focuses primarily on protecting a married woman’s financial independence and security. Let us understand what other laws it enacted:
Insurance is considered a lifelong decision; previously, women were not allowed to purchase insurance. This right helps them not to depend on their spouse for a term plan or health insurance.
MWP states that any earnings a married woman makes are considered her separate property. This includes her salary, income from business ventures, or any other source. Her husband or anyone else cannot claim ownership over these earnings.
This right allows married women to take legal action independently without the husband’s consent. For instance, she can sue or sued by, in her name, in case of any legal matter.
The 1923 amendment to the MWP Act allows a married woman to be the policyholder or beneficiary of a life insurance policy. This protects the payout from being claimed by the husband’s creditors or becoming part of his estate.
In this case, if a husband misuses his wife’s property, he is punishable under the Indian Penal Code (IPC). This can include selling the wife’s property without her knowledge.
As per this right, a husband is liable to pay off his debts on his own, even if he took them after marriage. The wife’s property or assets cannot be used to pay the husband’s debt without her consent.
Under the MWP act, any debtor cannot sell off the wife’s property to pay off her husband’s debt he took after marriage. It safeguards the women’s property from being sold off in case of any major debt payments.
The MWP Act ensures that a woman’s right to property or financial assets is legally protected and cannot be claimed by anyone else. This allows women to access these assets for their needs and ensures a safety net during challenging times.
For instance, when it comes to insurance, the husband can buy a life insurance policy for his wife and children. When the policy matures, the proceeds will not be under the husband’s control. Similarly, in the unfortunate passing of the husband, his creditors cannot claim the amount. The wife can use the money to secure her and her family’s financial future.
The Married Women’s Property Act (MWP Act) in India is a formidable safeguard, ensuring the financial security and independence of married women and their children in the face of unforeseen adversities. By incorporating a life insurance policy under the provisions of the MWP Act, policyholders can shield their families from the impact of outstanding debts, creditors, and familial disputes. This act ensures that the intended beneficiaries receive the financial support they deserve, irrespective of external pressures or legal challenges.
1
No, you cannot assign someone else or take a loan against the policy if your insurance plan is covered under the MWP Act.
2
Yes, you can surrender the policy, but the surrender form should be signed by the policy owner, Nominee/ Beneficiary (all beneficiaries) and Trustee. Only the trustee or the beneficiary is eligible to receive the surrender payout and not the policy holder.
3
No, you cannot change the beneficiary once you have opted for one already under the MWP Act.
4
In the event of your wife’s death, your legal heir will receive the proceedings of the policy. However, it is recommended to nominate more than one beneficiary.
5
Yes, you can have more than one insurance policy under the MWP Act, but they have to be registered separately under the Act.
6
No, your parents cannot be nominated as the beneficiary. The MWP Act only covers your wife and children.
7
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.
8
Yes, you can definitely buy more than one life insurance plan under the MWP Act. There’s no limit on the number of policies you can hold under this Act. This allows you to increase the financial security of your wife and children.
9
No, under the MWP Act, you are not liable to repay your wife’s debts incurred before your marriage. The MWP Act protects your own finances from being responsible for her pre-marital obligations.
10
Since the MWP Act does not apply to survival benefits, you, as the policyholder, might be eligible for the maturity proceeds if you are alive at the end of the policy term. These benefits wouldn’t be automatically directed to your wife or children under the MWP Act. However, you can always designate them as beneficiaries for the maturity proceeds.
11
Section 6 of the Married Women’s Property Act 1874 includes provisions for life insurance policy payouts. It allows a married man to take a life insurance policy solely for the benefit of his wife and/or children. The policy proceeds are protected from the control of the husband or his creditors.
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Features
Ref. No. KLI/22-23/E-BB/2435
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
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