Have life insurance policy? Save your wife, kids from shock, check Married Women's Property Act
It is a common phenomenon that people think after buying a term life insurance policy, their family and specifically their wife and children are protected against any unexpected events. Well, it doesn’t, because just buying a life insurance policy would not necessarily safeguard your family in getting the insurance claim money in case of your death.
Have you ever heard of Married Women’s Property Act (MWP) and how buying an insurance policy under this act which can protect your wife? Chances are negative. It is a common phenomenon that people think after buying a term life insurance policy, their family and specifically their wife and children are protected against any unexpected events. Well, it doesn’t, because just buying a life insurance policy would not necessarily safeguard your family in getting the insurance claim money in case of your death. There could be chances that your claim money may never reach the real beneficiary say wife or children.
Is there any solution to safeguard your term or any life insurance claim by making sure that it reaches your wife and kids?
Yes, you can buy a policy under MWP Act. In fact, married men should always buy a life insurance policy under MWP Act i.e. Married Women’s Property Act, 1874.
What is Married Women’s Property Act?
As the very name itself suggests, MWP Act covers married women only and it was enacted to shield all the properties owned by respective women from their relatives or lenders, creditors or being attached if their husbands declare bankruptcy. It is a sure shot plan which provides safety and security of assets/property from husband’s lenders, creditors or even the tax and legal departments.
And with respect to buying a life insurance plan under MWP act, it is covered under section 6 of the MWP Act. In fact, regular life insurance claims can also to be attached in case of a death of the husband and even the bank can take the money against the loans and claims will not be given to the nominee. But, MWP Act ensures that the banker or any other creditor will not get the money from an insurance claim.
How MWP Act safeguards your family?
All the policies what you will buy under MWP act, say for example the term plan bought under MWP Act will be treated as a trust and only those trustees will control the policy rights say servicing or reaping the benefits. In case the husband dies, death claim can only be received by the trust and only trustees can claim the same, thereby securing the financial future of your wife and kids.
Say, for example, you being a salaried person may have a housing/personal loans or you may be a businessman with business loans, then, in that case, the creditors will command the right to claim first on all your policy claims in case of your death.
But, when you purchase a term plan under MWP Act, then your wife/children can only have access to insurance proceeds.
Any policy covered under MWP Act will provide clear ownership rights to the beneficiary.
All the recipients i.e. the beneficiaries say wife or children once stated in your policy will remain unaffected throughout the policy term. And the moment your policy is issued, it cannot be considered a part your business or personal assets and thereby creditors or lenders cannot target the same.
How can you buy insurance under MWP Act?
When you are purchasing an insurance policy, then while filing up the application form, all you need to fill is the MWP addendum and the same will be provided by your life insurance company. So, say you want to buy a term plan under MWP Act, then what ultimately will happen is that your trust will get created and you can add the nominees i.e. wife/children as your trustees. In fact, one important point to note is that, in no way, you are buying a separate or a different policy rather whatever plans you wanted to buy from any insurance company can be tagged under MWP act in favour of your wife. So, it is not doing anything new or buying a new plan but just a simple tagging your proposed plan under MWP Act.
Who should opt for MWP Act?
l Salaried person (husbands) having home loans or any other loans and liabilities.
l Any businessman having business loans or any other liabilities.
l Anyone wanting to safeguard their wife or children from their creditors and relatives.
Can you tag your existing policies under MWP Act?
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No, sadly you cannot tag your existing policies under MWP Act. That choice has to be made right at the time of purchasing any insurance plans.
Source: DNA Money