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When a married man purchases a term insurance plan, he buys it solely for the purpose of securing the lives of his family, especially his wife and kids. However, it happens many times that the benefit received by the nominee under term plan is claimed by creditors or for loan repayment of the insured that was due. In fact, the creditors get the first chance to claim the proceeds.
Now, if you want to avoid such a situation where your sudden demise leaves your wife and children penniless due to the attack of the creditors, you must secure the claim amount solely for your wife and children by using the MWP Act in insurance. The Married Women’s Property Act or MWP Act, 1974 makes it possible for a married man to secure his family with the death benefit offered by the insurer. So, if the policyholder dies suddenly leaving behind debts and creditors, they cannot claim anything from the benefit if the plan is bought under the MWP Act.
When a term insurance is purchased using the MWP Act, India, the term plan is considered as a trust that can be controlled by trustees. Hence, in the event of the sudden demise of the insured, the claim amount can be obtained by the trustees only. No one else, including relatives or creditors can make a claim of the benefit.
The entire claim proceeds or death benefit are held by the trust for the wife and kid/kids. Hence, after the death of the insured, no one else can claim the benefit and it will be kept safe for the wife and children of the insured.
A life Insurance under the MWP Act can be purchased by a male married resident of the country. Even the men who are divorcees or are widowers can buy a term life insurance plan under MWP Act to benefit their child/children. It is important to note that the MWP Act benefit can be availed only if the policy is bought in the name of the male married person.
Below are some categories under which buying term plan under MWP Act can be considered:
It is very simple to buy a plan under the MWP Act insurance. All you need to do is to fill an appendix while filling the application form for buying the policy. Your insurer will support you with the details. You may note that after the policy is issued, it cannot be endorsed under the MWP Act. So, you must get it done at the time of buying the plan.
The name of your wife and children once added as nominee in the term plan under the married women’s protection act or MWP Act cannot be changed all through the policy term. So, the term plan bought under MWP Act does not offer the option to change the beneficiary. So, in case you get divorced from your wife after buying the policy, she is still eligible under the MWP Act beneficiary to receive the death benefit along with the children.
Also, only the following people can be chosen as beneficiary:
However, the policyholder has the option to segregate the amount of sum assured among the nominees as per his wish.
Further, the plan doesn’t allow the insured to apply for a loan under the policy with MWP Act.
If you are the sole earner or the key earner of your household, you must purchase a term life insurance cover to secure your family financially. Also, in case you have any amount as liability with a creditor, it is good to avail the term plan under MWP Act. This way, you can make sure that the proceeds of the term plan would solely help your loved ones at the time of need.
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The wife alone can be the beneficiary or the child/children (both natural and adopted) can be the beneficiary. Also, both the wife and children together can be the beneficiary.
Yes, the policy can be surrendered even if issued under MWP Act. However, it requires the signature of the beneficiaries at the time of surrendering such plans. In this case, the proceeds of the plan will be paid to the insured for the benefit of the nominees.
Parents and other relatives cannot be added as beneficiaries under the MWP Act. Only the spouse and kids can be nominated as beneficiaries.
Yes, the Beneficiary and the Trustee can be the same person. For instance, your spouse can both be the beneficiary as well as trustee. Your adult child or children, or even a third person can be the trustee.
Anyone who is a resident of India and a married man can buy insurance under the MWP Act.
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