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Buying Life Insurance Under the Married Women's Property Act

Yash's business was running on borrowed capital. One day, while heading home, Yash met with a tragic accident when a truck crashed into his car. He passed away on the spot. Post his demise, his creditors tried really hard to go after Yash's assets. But Yash had opted for a term insurance cover under Section 6 of the Married Women's Property Act (MWPA), 1874. This helped ensure that the death benefits paid out by the insurance company only went to Yash's wife (as mentioned in the policy). None of the creditors could claim even a single rupee from it.

What is the Married Women's Property Act?

Married Women's Property Act is a law that you can use to secure your family's future in the event of your demise. The Act safeguards a married woman's property from creditors. Section 6 of the Act, which covers life insurance plans, states the following:

“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 endure 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 interest 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.”

When a married man gets a life insurance cover under this Act, his policy gets treated as a trust. He can be assured that only his beneficiaries, which includes his children and spouse, will receive the policy proceeds. A married woman can also buy life insurance plans under the MWP Act, 1874. This, however, will come under Section 5 of the Act, and all of the policy benefits will remain as her separate property. The Act is in effect throughout the nation, with the exception of Jammu and Kashmir.

Who can be a beneficiary?

The beneficiary under the Married Women's Property Act in life insurance can be:

  • Wife alone
  • Child/children alone (natural and adopted)
  • Both wife and child/children

How to attach MWPA to life insurance?

The process of buying a policy under the MWPA is rather simple. All you have to do is fill up a form - MWP addendum - at the time of the application of a life insurance cover. It must be noted that you will not be allowed to convert an existing policy into an MWP benefit policy; this can only be done while buying the policy the first time. You will be required to mention the details of your spouse and/or children and the respective share of benefits.

Who should buy such a policy?

If you are a businessman, you definitely need to have a life cover under this Act. Why? There's going to be ups and downs, and you can never be certain when death is going to knock at your door. Should you have any pending debts at the time of your demise, the creditors and government can go after your assets. To ensure that your policy proceeds are free from creditors or any court attachments, make sure you purchase a life policy under the MWP Act.

Note: Once you have attached MWP Act to your policy, you can neither surrender nor get a loan against your policy.

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