How insurance bought under the MWP Act can help protect your wife

As the man of the house, you want the best for your wife and children. Be it providing them with your love, care and respect or fulfilling all their financial needs.

You buy your life insurance policies to provide for your wife and children in case something happens to you and you are no longer able to provide for them. But if you have an outstanding loan or have borrowed money from someone, your life insurance policies are eligible to be attached to the loan. In the event that you die before repaying the loan in full, the proceeds of your life insurance policy can be used to pay the bank or your creditor.

But you can secure the financial future of your wife and children if the worst happens to you. The Married Women’s Property (MWP) Act is here to enable you to do just that.

The MWP Act was incorporated to protect the rights of a married woman and her children. The idea behind this act is that the family benefits from a life insurance policy and no one else can take it, anyway.

Section 6 of the MWP Act allows a married man who takes out a life insurance policy on his own life to ensure that the policy is deemed to be a trust for the benefit of his wife or children. The beneficiaries of this trust can only be his wife or children and in no case can the benefits of this policy be paid to anyone other than the beneficiaries.

When you buy a policy under the MWP Act, you create a trust. You must provide details of trustees who can be your wife and/or children. You can also make multiple trustees at that time. And this trust can only be operated by the future trustees. So no one other than your wife and children (the trustees) can get the benefits from this trust.

Once you create this trust, even you cannot undo it or change the beneficiaries in the future.

Term insurance policies are usually very high interest. When the insured person dies, the bank or other creditor can use the proceeds from this to settle the outstanding loan. But you bought the policy with the intention of protecting your family in case something like this happens to you.

To make sure that happens, buy your life insurance policy under the MWP Act. The benefits will always be paid to your wife and children, even if you have other liabilities to pay when you liquidate the policy. If you have an outstanding loan such as a home loan, your bank cannot attach your policy in case you are unable to pay the loan. If you have borrowed money from someone, they cannot claim the proceeds from this policy.

People want to protect the rights of their wives and children but many people are not aware of this act. Now that you are reading this article, you want to go and provide for the MWP Act in your existing life insurance policies. But you can’t do that. You can only choose to have your policy under the MWP Act when you buy a new policy.

If you wish to purchase a new life insurance policy under the MWP Act, you must complete an MWP addendum along with the policy application form. If you are buying your policy online, you will have the option to choose if you want to buy the policy under the MWP Act. You must select this option or “yes”.

Who should be chosen? Married businessmen or service men who are Indian residents and have outstanding loans such as home loan. Married men who borrowed money from family/relatives or other creditors. Married business people whose businesses have incurred debt. Widowed or divorced men can take out a policy under the MWP Development Papers Act and name their children as beneficiaries. The idea behind own life insurance is to protect the future of the family, so any married man who buys a life insurance policy should buy it under this Act.

Nidhi Verma is the founder and chief executive officer of Algates Insurance.

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Updated: 09 November 2023, 10:50 PM IST

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