One who loves his wife would never compromise on the things he chooses for her. If you were to gift her jewellery, you would certainly take care of its purity as much as you would pay heed to its design and looks. Similarly, when you buy a life insurance to cover yourself, would you forget to fill your wife’s name under the nominee column? Certainly, you won’t.
Of late, people have realised the importance of buying an insurance plan for the purpose of securing their family’s financial future and not in anticipation of monetary benefits while they are still alive.
But when it comes to choosing the right insurance plan, there are few things every man should know. All married men should apply for life insurance under the Married Women’s Property (MWP) Act, 1874. Here is why
Married Women’s Property Act
As the name suggests, this Act covers only married women. It was incorporated to protect properties owned by women from relatives,creditors and even from being attached in case of loans taken by their husbands.
The MWP Act helps provide protection against claims so that the insurance amount goes to no one but your wife and children. This is a fool-proof plan to provide security of property from husband’s creditors, the tax department, etc.
Let us say that the proposer (in this case the husband) has taken a business loan on his personal guarantee. The bank has the authority to attach his financial assets to recover the due amount in case something happens to him before the completion of the loan.
Life insurance policies are also entitled to be attached which means the claims that are paid on the death of the husband go to the bank and not to the surviving members. MWP Act makes sure the banker or creditor is unable to recover the amount from the insurance policy which was brought with the intention of protecting the family.
The idea behind MWP Act is that the entitlement of the life insurance proceeds are for the protection of the family, and the bank is not able to attach it, in any case.
If you have a home loan, it’s advisable to buy the insurance policy under MWP Act. This is way the house is protected in your absence and the entire death claim goes to your wife and children.
How to buy insurance under MWP Act
At the time of making the application, you just need to fill an MWP addendum. This form is also provided by the life insurance company. Section 6 of the MWP Act covers life insurance.
When you buy a term insurance plan under the MWP Act, what you are doing is creating a trust. You have to then add your nominees (wife and children) as trustees. Only the trustees will have access to the trust, i.e., the money and no other person can claim the amount.
In case of death claim, policy proceeds cannot be claimed by creditors nor will it form part of the estate of the deceased. If the policy is bought under MWP, even your relatives or people who you may have borrowed money from in the past cannot make a claim and the welfare of the wife and children will be protected.
Who should opt for MWP Act?
• Businessman and salaried individuals with loans or liabilities.
• People who want to protect their wife/children from creditors/relatives who might have fraudulent intentions.
• The benefit amount with term life insurance can be a huge sum enough to financially protect someone’s future in your absence. So it will be a good decision if everybody who is buying term life insurance chooses to protect their loved ones under MWP Act
MWP and existing policies
Not just term plan but any life insurance policy can be covered under MWP Act. But despite the benefits there is negligible awareness about the Act. But after reading this article, you may have the urge to add an existing life insurance policy under the MWP Act. But unfortunately you cannot do this.
You have to make the choice at the time of buying the insurance policy. In case you already have a term insurance policy and you want to cover it under the MWP Act, you will have to opt for a new term insurance policy to be covered under the Act.
Online is simple and fast
When you buy a term insurance policy online, you will be asked a question on whether you want to buy it under the MWP Act. All you have to do is select “Yes” for this question.
Once selected, you will have to enter the beneficiary and trustee details, for example, the beneficiary name, relationship, date of birth and benefit share (in percentage). You can only choose your wife/child/children as beneficiaries. You can even add multiple beneficiaries.
Life insurance under MWP Act is the easiest way to protect your dependant family members that too at no extra cost. So next time, you plan to buy an insurance plan, make sure you buy it under the MWP Act.>