When you buy term insurance under the MWP act, your family’s interest is the priority. Only your wife and children are eligible to get the sum assured on your demise.
The Married Women’s Property Act is a welfare act established in 1874. This was made to safeguard married women’s rights and absolute ownership of their earnings, wages, investments, property and savings. The insurance policy issued under the Married Women’s Property (MWP) Act gives the first right to the wife and children of insured persons. This policy is beneficial for both salaried and businessmen.
The main intention of a term insurance policy is to provide financial security to the wife and children in absence of the insured. Insured wants the sum assured or claimed amount to quickly and directly reach spouse and children without any hassle after his demise. But if the insured had any outstanding loan, the creditors will have priority over the beneficial nominee to claim the insurance. So buying just a term loan may not ensure the security of your wife and children after your demise as they may not get the sum assured if you have debts.
MWP Act in Insurance
Under a normal term insurance policy, which is not under the Married Women’s Property (MWP) Act, the sum insured can be claimed by creditors or any other family members of the insured. But if you want the sum assured to be passed only to your wife and children then you need to buy term insurance under the MWP act, 1874. The MWP act ensures that only your wife and children can claim the sum assured after your demise. If you are the breadwinner for the family and want to provide extra security to the family after your demise, then buy a term insurance policy under the MWP act.
Features of MWP Act in Insurance
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Under this type of insurance, a wife cannot make her husband the nominee but children can be the beneficiary
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Only wife and children can be the beneficiaries under this type of insurance
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The insurance claim amount is directly given to the wife and/or children only
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The sum assured cannot be attached to the repayment of debts
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The sum assured cannot be taken away by creditors
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Only married people can buy this policy
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Parents cannot be added as beneficiaries under this type of insurance
The Married Women’s Property Act
Section 6 of the MWP Act says – “a policy of insurance effected by any married man on his own life and expressed on the face of it to be for the benefit of his wife, or of his wife and children, or any of them, shall ensure and be deemed to be a trust for the benefit of his wife, or of his wife and children, or any of them according to the interests so expressed, and shall not, so long as any object of the trust remains, be subject to the control of the husband, or to his creditors, or form part of his estate”.
Why Buy Term Insurance Under MWP Act?
Most individuals have high financial goals and rely on loans to achieve that. Loans can be a personal loan, business loan, home loan or consumer loan. Most business people go for business loans like term loans to reach their business goals. They need to buy a term insurance policy under the MWP Act for the benefit of their wife and children. So that the creditors don’t attach a loan to the sum assured on your demise but your wife and children can rightfully utilize the funds. All married Indians can buy term insurance under the MWP Act. This needs to be executed at the time of purchase of the policy and before the creation of any liability. You cannot convert your existing policy to policy under MWP Act.
How To Buy Policy Under MWP Act?
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At the time of taking the policy, along with the insurance application, the Policy buyer /insured has to fill and sign an MWP act addendum.
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The application form may have this option, in that case, policyholders just need to select the ‘yes’ option under the MWP Act
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The beneficial nominee needs to be specified and cannot be changed in the future.
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The beneficial nominee can be your wife or your children or both.
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Specific percentages of the sum assured can be assigned to each beneficiary.
Summing Up
Policy features, benefits and other terms and conditions are the same for both a term insurance policy and a term insurance policy under the MWP Act. This policy under MWP Act is a security to your family against creditors, extended family members and the repayment of loans. It ensures and secures the financial future of your wife and children.
