Term life insurance is an essential financial safety net for families. It provides a death benefit to help cover final expenses and replace lost income in the event of the policyholder’s death. The amount that is insured in a standard term insurance policy is subject to being claimed by wrongful parties or beneficiaries, such as creditors or greedy family members who can make a claim on the policy’s benefits. So consider purchasing your term life insurance under the MWP Act.
What is the Married Women’s Property (MWP) Act?
The Married Women’s Property Act is a law that protects the property rights of married women. The Married Women’s Property Act provides special protections for the wife and children of the person who has purchased the term life insurance. Under the Act, a spouse’s term life insurance policy is considered a married woman’s separate property.
Section 6 of the Act specifically states that
“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.”
What is the benefit of purchasing term insurance under the MWP Act?
It is a legal protection for a woman’s property that ensures she and her dependents have money to live on. If a term life insurance is bought under the MWP Act, the insurance befits cannot be seized by creditors or greedy relatives in the event of her husband’s death. In fact, as per the Act, the insurance benefits cannot be owned, used, or claimed by anyone else, not even her husband, parents, in-laws, children, or brothers.
Who can purchase term life insurance under the MWP act?
The policy can be bought by a married man, a widower, a divorcee, or a married woman who wants to ensure the financial security of her children.
Who should purchase term life insurance under the MWP Act?
The policy benefits salaried people who still have loans to pay off, business owners who have a lot of debt, members of joint families and HUFs, and people who live on credit but have irregular or unstable incomes. This is because any insurance policy purchased under the MWP Act does not count as part of the individual policyholders’ or joint families’ collective property. It has a distinct, singular title issued to the nominated beneficiary, which might be the wife and/or the children. In addition, under the terms of this Act, debtors do not have a right to the insurance benefits.
Is it possible to switch beneficiaries of a policy purchased under the MWP act? For example, what happens if you name your wife as the beneficiary, but then you two later decide to get divorced?
Even if you and your wife get divorced, the MWP Act does not allow you to change the beneficiary after you have officially chosen one and opted into the programme.
How to buy term life insurance under the MWP Act, 1874?
Policyholders must fill out and sign an MWPA addendum while filling out and signing the insurance application. Some insurance companies include this option on the application form, and policyholders just have to check the “yes” option under the MWP Act.
Under the MWP Act, can I assign or take a loan on my policy?
No, your policy covered under the MWP Act cannot be assigned to another individual, and you are not permitted to take out a loan against policies covered under the MWP Act 1874.
Can I assign my existing term life policy under the MWP Act?
No, you cannot. Per the MWP Act, a policy cannot be subsequently assigned once issued.
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