Secure Your Wife's Future with Term Insurance under the MWP Act

Starting a family is a huge responsibility. Most earning men think that buying a life insurance plan is sufficient to secure the future of their wives and children in their absence. They do proper research, buy the best term insurance policy, get an adequate sum assured, opt for suitable add-ons, pay the premiums regularly, and whatnot! They do everything to ensure their spouse and children continue living the same lifestyle and do not have to compromise on their financial goals in case of the breadwinner's unfortunate demise.

However, if life insurance is the only backup fund, it might not prove to be the best option for the financial security of your beloved family. In case of any outstanding dues to the banks, other financial institutions, friends or relatives, the creditors will have a prior claim to the insurance money, and the family (nominee) may not get access to the life insurance policy benefits, depending on the total outstanding amount.

Hence, to ensure the life insurance benefits get passed on to your wife and children, you should buy a term life insurance policy under the Married Women's Property Act 1874.

This article elucidates how you can secure your wife and/or children's financial future by buying a life insurance policy under the Married Women's Property Act.

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What is MWP Act?

As per the Married Women's Property Act 1874, the earnings (the properties acquired by her or vested in her) of an Indian married woman are her own property. Her husband or any other person/entity cannot acquire any interest in such property. Hence, buying insurance under MWP Act can secure your wife and children from the financial burden of debts and/or family conflicts.

Section 6 of the Act explains 'Insurance by husband for the benefit of wife' as "A policy of insurance effected by any married man on his own life, and expressed 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 deemed to be a trust for the benefit of his wife, or of his wife and children, or any of them, according to the interest so expressed, and shall not, so long any object of the trust remains, be subject to the control of the husbands or to his creditors, or form part of his estate."

Here are the key features of the insurance bought under the MWP Act:

• The act came into force to safeguard married women's ownership of property, earnings, and any other investments made by them.

• It secures married women's properties from lenders/creditors and in-laws.

• Neither the husband (policyholder) nor any relatives can acquire an interest in his wife's property.

• Only a husband can buy a life insurance policy under this act to secure the well-being of his family. A wife cannot buy an insurance policy in the name of her husband under this act. However, she can buy the policy in her name and keep her children as beneficiaries.

Who can buy an insurance policy under the MWP Act?

A married man who is a resident of India can take an insurance policy under the Married Women's Property Act. A widower or a divorcee can also buy the insurance policy and name their children as beneficiaries. However, this benefit can only be availed at the time of taking the policy if the policy is bought in your own name.

So, you should consider buying a term insurance policy under the MWP Act if -

• You want an extra layer of security for your wife and children

• You have loans and liabilities in your name

• You want to safeguard your family from creditors and relatives with dishonest intentions

Who can be the beneficiary of the insurance policy bought under the MWP Act?

You can appoint your wife alone, your wife along with the child/children, or just the child/children as the beneficiary of the insurance policy bought under the Married Women's Property Act.

You can choose to divide the sum assured equally among all the nominees or assign specific percentages to them. However, take note that the nominees cannot be changed or modified once you have appointed them. So, in case you appoint your wife as the nominee and later get divorced, she will still remain the beneficiary of the policy.

How to buy a life insurance policy under the MWP Act?

The procedure to get your term insurance or other life insurance policy under the Married Women's Property Act is quite easy. You simply have to fill in an addendum while filling out the insurance proposal form. If required, you can ask for assistance from your insurance agent or concerned staff.

However, take note that you have to get the insurance policy endorsed under the MWP Act only at the time of buying it. Once purchased, you cannot endorse it under the act or make any changes in the policy.

To conclude:

As a breadwinner of the family, in the back of your mind, you always think of your family's safety and security in your absence. But simply buying adequate coverage of a suitable life insurance policy is not sufficient. You also need to make sure that the benefits of the life insurance policy are passed on to them when the time comes. Therefore, it is crucial to buy an adequate life insurance cover under Married Women's Property Act in your wife and child/children's name so that they continue living their life without compromising on anything.

KETKI JADHAV is a Content Writer at PersonalFN since August 2021. She is an MBA (Finance) and has over seven years of experience in Retail Banking. Ketki specialises in covering articles around banking, insurance, personal finance, and mutual funds and has been doing it for over three years now.