Updated on: 26 May 2023
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? Do you wonder what will happen if the creditors take away all the policy money? This is where the MWP Act in insurance comes into play.
Key Takeaways
- The MWP Act was enacted to offer financial safety to married women and their children.
- This Act plays a crucial role in protecting the legal rights of women in case of their spouse’s death or in case of dissolution of marriage.
- MWPA benefits include protecting the needs of the family, ensuring financial security for the wife and children even if there is a family dispute, and empowering women’s rights in terms of financial security.
- The beneficiary, once added to the contract, cannot be changed throughout the policy tenure, and if the beneficiary dies, the legally appointed heir may claim the insurance payout.
Now you must be thinking about what is MWP Act and how it will help in safeguarding your wife and children. Let us understand in detail what the MWP Act is, its pros, and how it secures your family.
What is the MWP Act?
The Married Woman Property Act 1874 was enacted to curb the injustice against women and offer them financial safety after the unforeseen demise of the family’s breadwinner. The act ensures that married women in India have an independent and sole right to their property, which cannot be claimed by anyone else, not even their husband, parents, in-laws, or children.
The Married Woman Property Act 1874 was amended in 1923 to include a life insurance policy, offering financial security to married women and their children. This act is included in the life insurance policy bought by the policyholder 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.
How Does the MWP Act Protect Your Family?
As stated above, under the MWP Act in insurance, the MWPA benefits are only for the policyholder’s wife and children. 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 in the case of the MWP Act, the rules are different. For example, as an individual breadwinner for your family with a home/personal loan or a business owner with debts, under any other policy apart from MWP, your creditors and lenders will have the first claim on the proceeds of your term life insurance policy after your unfortunate demise, leaving your family financially unstable.
However, when you buy the policy under the MWP Act in India, then only your wife and children will be able to make claims on the policy process of your term insurance.
Benefits of Buying Insurance with MWP
Safeguarding your assets and protecting your loved ones has become increasingly important. 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:
- The MWPA policy can be bought only to insure the policyholder’s wife and children. The beneficiaries are decided at the time of purchasing the policy and cannot be changed later on.
- The needs of the policyholder’s family are given priority.
- The MWP Act in India is applicable to every married woman, irrespective of their religion.
- A policy with an MWPA policy addendum will provide financial protection for the wife and children of the policyholder in the event of a family dispute if they are living in a joint family.
- By purchasing the life insurance with MWP Act, there is no requirement to create a trust separately for your children.
- Policyholders may divide policy proceeds per beneficiary into either equal amounts or specified percentages set when buying the policy under MWP Act in India. This percentage cannot be changed later.
Who Can You Name as Beneficiaries in Insurance under MWP Act, 1874?
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:
- Only your wife
- Only your children (both natural, as well as. adopted)
- Your wife and children together
Beneficiaries under 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, it is essential to list multiple beneficiaries under MWP Act when purchasing a policy.
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.
How to Buy Term Insurance Under the MWP Act, 1874?
Buying your term insurance plan under the MWP Act 1874 is quite a simple process. Keep reading through to know the details:
Understand the MWP Act Clause
While evaluating term insurance policies, look for those explicitly mentioning compliance with the MWP Act 1874. Ensure that the policy allows you to designate your wife and children as beneficiaries under this act.
Choose the Sum Assured
Assess your family’s financial needs, including liabilities, future goals, and living expenses, to determine an appropriate sum assured. The chosen coverage should be sufficient to meet these needs even in your absence.
Fill out the Application Form
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.
Nominate Beneficiaries Under the MWP Act
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.
Pay the Premium
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.
Review the Policy
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.
Regularly Update the Policy
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.
Illustration for a Better Explanation
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. After his unfortunate demise, his lenders demanded that their dues are paid using the sum assured received from the term insurance policy. But 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 made sure that the wife and the children received the money.
Final Thoughts
Purchasing a policy under the MWP Act in India is a wise decision, as it helps to protect your family during an unfortunate event. The MWP Act gives married women the security and assurance that their property is protected from creditors and that the estate they create will be passed on to their heirs. Buying an insurance policy under MWP Act can provide invaluable financial protection for those with children, assets, and other financial responsibilities.
FAQs
1
Under the MWP Act, can I Assign or Take a Loan on my Policy?
No, you cannot assign someone else or take a loan against the policy if your insurance plan is covered under the MWP Act.
2
Can I Surrender a Policy that 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.
3
Can I Change The Beneficiary of the Policy, If I Nominate My Wife as the Beneficiary, But We End up Divorcing Each Other?
No, you cannot change the beneficiary once you have opted for one already under the MWP Act.
4
What If My Wife is the Beneficiary of the Policy, But She Passes Away Before Me?
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.
5
Can I Have More than One Plan Under The MWP Act?
Yes, you can have more than one insurance policy under the MWP Act, but they have to be registered separately under the Act.
6
Can I Nominate My Parents As Beneficiaries Under the MWP Act?
No, your parents cannot be nominated as the beneficiary. The MWP Act only covers your wife and children.
7
Can I Assign an Existing Life Insurance Policy Under the MWP Act?
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.
