you looking to purchase a life insurance policy to financially secure your wife
and children in case you are no more? But what if your wife and children dont
get even a rupee out of the proceeds when they need it the most? This can
happen if you have an ongoing home loan or a business that has incurred debts.
In such a situation, the sum assured can be claimed by your creditors or
attached by the court for repayment of your debts. But theres good news: You
can avoid this by simply buying your life insurance policy under the Married
Women's Property Act, 1874.
Married Women's Property Act, 1874 (MWPA) was created to secure the assets
owned by a woman against her husband, his creditors and relatives. Section 6 of
the MWPA covers any insurance policy taken out by a man on his own life in
favor of his wife and children. So, if youre buying a life insurance policy
under the MWPA for the benefit of your wife and children, the sum assured will
always be their property. It cannot be claimed by your lenders nor will it be
considered a part of your business assets (or estate).
5 of the MWPA states Any married woman may effect a policy of insurance on her
own behalf and independently of her husband; and the same and all benefit,
thereof, if expressed on the face of it to be so effected, shall ensure as her
separate property, and the contract evidenced by such policy shall be valid as
if made with an unmarried woman.
per MWPA, every insurance policy thats covered under the MWPA is automatically
considered as an individual trust with the beneficiaries as trustees. There is
no need to formally create a trust or even a settlement deed for the benefit of
your dependent(s) named in the policy.
you are a resident of India and a married man, you can take an insurance policy
under the MWPA. You can also purchase the policy if you are a widower or a
divorceein such a scenario, you may name your children as beneficiaries.
However, the benefit can only be availed while taking the policy, and that too
if you buy the policy in your own name.
can you name as beneficiaries?
beneficiaries defined in a policy that is covered under the MWPA can be your
wife alone, just your child or children, or your wife and children together. As
a policyholder, you can assign specific percentages of the sum assured to each
beneficiary or divide it in equal amounts. However, once the policy has been
issued, you cannot change the beneficiaries. So when you appoint your wife as
the beneficiary and in case you both divorce, your beneficiary (wife) will
remain the same.
else does the MWPA do?
a policyholder, you cannot take a loan against the policies that are endorsed
under MWPA. In case youre surrendering a cash-value policy, the proceeds due
upon surrendering will go to the beneficiaries. Also, if you survive the policy
term, the maturity proceeds would still be paid to your beneficiaries.
to take an insurance policy under the MWPA?
process of getting an insurance plan endorsed under the MWPA is very simple.
All you need to do is fill up an addendum along with your insurance application
at the time of taking the policy. You can ask your insurance agent for this
addendum, or simply inform the insurer that you want to register the policy
under the MWPA while buying the policy offline.