MWP Act
Married Women’s Property Act 1874 (MWP Act)
MWP Act was created to protect the properties owned by women from relatives, creditors and even from their own husbands. The Act has been created to protect women’s rights, even after marriage. MWP act is applicable to all married women of all religions. ‘Section 6‘ of the Married Women’s Property Act covers Life Insurance plans.
If you take an insurance policy under the Married Women’s Property Act, your life insurance policy is treated as a TRUST and you can be assured that the policy money will be given to your nominee(s) only. The claim proceeds are free from creditors, court and tax attachments.
Add MWP Act to your LIC policy while buying Insurance cover
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Who can take an insurance policy under the MWP Act?
Any married man can take a life insurance policy under the Married Women’s Property Act. This includes divorced persons and widowers. The policy can be taken only on one’s own name (the life assured has to be the proposer himself). Any type of plan (money-back / Term plan / Endowment etc.,) can be endorsed to be covered under the MWP Act.
Even a married woman can buy the Married Women’s Property Act policy in her name with her children as beneficiaries, the husband will not get anything from the policy. It will be considered as a separate asset as if she is unmarried.
How to get an Insurance Policy covered under the MWP Act?
Getting a policy assigned under the MWP Act is easy and inexpensive. At the time of making the application (buying a policy), a separate MWP Act form has to be filled out by the proposer for it to be covered under the MWP Act. You need to provide details of the beneficiaries, the share of the benefits that are to be accrued to them and the trustees. Providing the trustee(s) names is not mandatory.
Please note that the existing life insurance policies cannot be assigned under the MWP Act.
Who can be the beneficiaries?
The beneficiaries can be:
1. The wife alone
2. The child/ children alone (both natural and adopted)
3. Wife and Children together or any of them
How life insurance policy under the MWP Act safeguards women’s interest
Can Change the beneficiaries’ and trustees’ names?
An insurance plan under the Married Women’s Property Act is considered as a separate trust automatically (there is no need to create a trust). At the time of the proposal, you have to mention the names of the beneficiaries. You may also mention the names of trustees (not mandatory, though).
But, if the beneficiary is a minor, then the appointment of the Trustee is compulsory.
The trustee cannot be a minor / HUF (Hindu Undivided Family).
Also, the proposer can neither be the beneficiary nor the Trustee.
The Beneficiary and the Trustee can be the same person (e.g. Your wife can be both the beneficiary and the Trustee).
The trustees can be the wife and/or one or more of his adult children, or a third person.
You (the policyholder) have the option to change the trustees at any point in time. However, the beneficiaries of the plan once declared cannot be changed.
In case of a death claim, the insurance policy proceeds are given to the trust and cannot be claimed by the creditors.
Can assign or take a Loan on policies that are under Married Women’s Property Act?
No, cannot assign the policy to another person (or) take a loan on the policies which are covered under MWPA. (However, if a loan request comes from you, signed by the beneficiary and trustee then it can be processed)
Can surrender the policies which are under the Married Women’s Property Act?
The surrender request should come from the policyholder and be signed by the Trustee (if appointed) and beneficiary. The beneficiary should be major at the time of the request. Surrender proceeds will be paid to the Trustee/Beneficiary. The policy maturity benefits will also go to the Trust.
Due to a lack of awareness, very few policies are being taken under the Married Women’s Property Act. Life insurance is a tool to protect dependent family members. If this purpose is to be achieved in its fullness, then having the life insurance plan covered under the MWP Act is the easiest and the best way.
We buy Life insurance cover to protect ourselves and our family members in case of any unfortunate event. We are also aware that an individual needs to buy an adequate Term Plan if his family members are dependent on him/her.
An Example – Mr Amar is a businessman and borrows some capital to expand his business. He has taken a Term Insurance Policy with his spouse as beneficiary (nominee). After his sudden demise, his creditors approached the court and asserted their right to get paid out of the proceeds of the Term Insurance policy.
In this example, though Mr Amar has taken a term insurance policy, his family has not benefited from it. The claim proceeds (death benefits) are given to his creditors.
In today’s world, ‘buying on credit’ has become a common thing. Whether employed or self-employed, most of us buy on credit (home loan, personal loan, consumer loan etc.,). In this kind of scenario, how to make sure that only your dependents receive the insurance policy claim proceeds?
Due to a lack of awareness, people are not making use of the Married Women’s Property Act. For Big Life Insurance policies, the MWP Act is a blessing. However many people, even in the insurance industry, are not aware of the provisions of the MWP Act. Under the Married Women’s Property Act, the proposers lose control to change or make alterations to the plan.
Request to all Women Life Insurance proposers, Kindly go to a professionally qualified Insurance Advisor and sign for Married Women’s Property Act form along with the Application form. But, never misuse the Married Women’s Property Act with the intention to defraud your creditors.
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Married Women’s Property Act MWP Act