Why married people should buy term insurance under MWP Act
- Married People Buy Term Insurance In this case, your family’s interests come first.
- only your wife and children are entitle to the sum assured.
- The insurance policy issue under the MWP Act is generally beneficial for salaried people or businessmen.
When buying a term insurance policy, you aim to secure the future of your wife and children in your absence.
You want that the claim amount reaches them quickly and without any hassles.
However, if there are any outstanding loans to any creditors or relatives or friends.
The creditors would have a prior claim to the money before your beneficial nominees (spouse and children).
Simply buying a term insurance policy alone will not inevitably ensure that your beneficial nominees can get the sum assure after your demise.
In a normal term insurance policy
A policy which is not buy under the MWP Act, the sum insured might be claim by miscreants.
Beneficiaries such as creditors or any other family members who can lay a claim to the policy benefits.
Thus, to ensure that the sum assure is pass on to your wife and/or children.
You must buy a term insurance policy under the Married Women’s Property Act, 1874.
If the policy is bought under the MWP Act, then your family’s interests come first and only your wife and children are entitled to the sum assured in the unfortunate event of your passing away.
This type of policy cannot work in reverse
A wife cannot make her husband the beneficiary and take the benefit of this Act.
She can, however, buy a policy under the MWP Act in her name with her children as beneficiaries.
A policy under the MWP Act simply means that your insurance claim amount directly reaches your wife/children, insulating her/them from any loans or liabilities that you owe.
Thus, the amount cannot be attached or taken away for repayment of debts.
In other words, it ensures that no one else such as creditors can claim this amount.
“So, if you are a male and the breadwinner of your family.
It helps to get additional security by opting for your term policy under the MWP Act at the time of purchase.
The MWP Act
Section 6 of the MWP Act highlights that a policy of insurance effect by any married man on his own life.
Express 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 deem to be a trust for the benefit of his wife, or of his wife and children.
Any of them according to the interests so express 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.
The insurance policy issued under the MWP Act is generally beneficial for salaried individuals or people in business.
Individuals sometimes rely on loans such as personal loan, home loan, business loan.
Consumer loan to achieve their financial goals
For instance, an individual looking to take loans for fulfilling his financial dreams/goals.
Such as business loan and loan for plant and machinery, should take a term insurance policy under the MWP Act.
The benefit of his policy cannot be attach by the creditors and be rightfully utilize by his wife & children.
All married persons in India can opt for term insurance under the MWP Act.
The term policy under MWP needs to be execute before the creation of any liability & at the time of purchase of the policy.
This means you cannot get your existing term insurance policy modify under MWP Act.
How to buy
The process of getting an insurance plan endorse under the MWP Act is simple.
Policyholders need to fill up and sign an MWPA addendum along with the insurance application at the time of taking the policy.
Some of the insurers have this option even in the application form.
Policyholders need to just select the ‘yes’ option under the MWP Act.
If a term insurance policy is buy under the MWP Act.
The beneficial nominee once opt at the time of taking the policy cannot be changed in the future.
Parents cannot be add as beneficiaries under the MWP Act.
Only your wife or children can be made as beneficial nominees.
Hence, you can either make your wife a beneficiary or your children or both.
You can assign specific percentages of the sum assured to each beneficiary.
Whether you buy a term insurance policy under the MWP Act or not.
The term insurance policy features, benefits and other terms and conditions remain the same.
This Act basically works as a safeguard from the repayment of loans.
Extend family members or any other creditors who might claim the money after the demise of the policyholder.
Guarantees that the financial future of his spouse and children is protect.
How to get an Insurance Policy cover under the MWP Act?
Getting a policy assign under MWP Act is easy and inexpensive.
At the time of making the application a separate MWPA form has to be fill by the proposer for it to be cover under MWP Act.
You need to provide details of the beneficiaries, the share of the benefits that are to be accrue to them and the trustees.
Providing the trustee(s) names is not mandatory.
Do note that the existing life insurance policies cannot be assign under MWP Act.