Married Woman Property or MWP Act 1874 in Life Insurance : Overview & Benefits
We all buy insurance in order to protect our family in event of an unfortunate and unforeseen event. This purpose will be met only if the nominee of your policy receives and use the policy money i.e. claim payout. But what if, they are denied this claim money. Such scenario will leave your loved ones devastated both emotionally and monetarily
Let’s consider a scenario.
Mr. Joshi who is a businessman has borrowed money from bank in order to expand
his business. Also he has taken policy in which the nominee is his wife. Mr.
Joshi unfortunately passed away before repaying the loan. The bank has
approached court to claim the money equivalent to outstanding loan balance. So
is the purpose of having insurance for financial protection of family is
fulfilled in this case?
Such scenario will only
become more and more common as India is rapidly moving towards “credit”
culture. Now a day’s borrowing money for business /personal expense is no
strange thing to any of us. In this scenario we must ensure that our loved ones
get the policy money in case of any unforeseen event.
It is quite easy to save
your family from such mayhem by legal safeguarding policy. This safeguard is
known as Married Women’s Property Act of 1874 or simply MWP Act. This act ensures well-being and
emotional peace of your dependents even if your personal finances are in
crisis.
MWP Act was
created to protect the properties owned by women from relatives and/or
creditors. The Act has been created to protect women’s rights and it’s applicable
for all married women of all religions. Section 6 of the MWP Act covers
Life Insurance plans.
If you take an insurance
policy under MWP Act, your life insurance policy is treated as a TRUST and
you can be assured that the policy money will be given to your nominee(s) only.
The claim proceeds are free from creditors, court and tax attachments.
Who can take an insurance
policy under MWP Act?
Any married man can take a
life insurance policy under MWP Act. This includes divorced persons and
widowers. The policy can be taken only on one’s own name (the life
assured has to be the proposer himself). Any type of plan can be purchased
under MWP Act. However the endorsement i.e. selection of this provisions is to
be done at time of policy issuance only. Later this provision can’t be attached
with the policy.
Even a married woman can buy
MWP policy on her name with her children as beneficiaries. Note, husband can’t
be a beneficiary under this act and will not get anything from the policy.
Who are beneficiaries of policies under MWP Act?
-
Only Wife
-
Child/ Children only (including adopted)
-
Wife and Child/ Children
In case of more than one
beneficiary, policyholder can appoint one person as trustee. Note this is not
mandatory and can be done in events of minor children etc.
Due
to lack of awareness, very few policies are being taken under MWP Act. Life
insurance is a tool to protect the dependent family members. If this purpose is
to be achieved in its fullness, then having the life insurance plan availed
under MWP Act may be considered. Note the purpose of MWP is not to defraud your
creditors.
Frequently Asked Questions
(FAQs)
Can I assign or take a Loan
on policies which are under MWP Act?
No,
policy covered under MWP Act 1874 cannot be assigned to another person (or) no
loan can be taken against the policies covered under MWP Act 1874. Clink on the link here to read entire MWP Act PDF on http://legislative.gov.in/
Can I surrender the policies
which are under MWP Act?
Surrender
request has to come from policyholder and signed by the Trustee. Trustee(s) can
directly submit surrender request. Surrender proceeds will be paid to the Trust
for the benefit of the beneficiary as stated in the policy.
If I make my wife the
beneficiary and we later divorce, will she continue to remain the beneficiary
of the policy?
The
beneficiary once opted at the time of taking the policy cannot be changed. So
when you appoint your wife as the beneficiary and in case you both divorce, the
beneficiary under this policy will remain the same.
What happens if I name my
wife as beneficiary and she passes away before me?
If
your beneficiary (wife) passes away before you, the legal heir of the
policyholder shall be eligible to receive the claim amount. However, it is
advisable to mention more than one beneficiary at the time of taking the
policy.
Can you have more than one
plan under the MWP act?
Yes
you can have more than one plan under MWP Act. But you have to register each
one of them separately under MWP Act.
Can parents be added as
beneficiaries under the MWP act?
No
the parents cannot be added as the beneficiaries under the MWP Act. Only your
wife/kid/kids can be chosen as beneficiaries
Can I add existing policies
under MWP Act?
No,
existing policies can’t be endorsed with MWP. The MWP option can only be
exercised at time of issuance of policy.
If you wish to go into further details of Married Woman's Property Act, click here to read law commission detailed PDF report
If you wish to go into further details of Married Woman's Property Act, click here to read law commission detailed PDF report
Feel free to
call / whatsApp us on 9325295502 if you wish to purchase insurance policy under MWP and to secure future of your family
Team
Grow Wealth Advisors
