A term insurance plan under the Married Women’s Property (MWP) Act will ensure financial protection of the insured’s wife and children in his absence. The insurance pay-out will only go to them and no creditor of any outstanding loan of the insured can stake claim on the amount.
In case a woman is opting for MWP Act when buying a term insurance policy, the entitled beneficiaries will be her children. The option is available in most term plans and there is no additional cost for availing this benefit.
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To purchase a policy under the MWP, the policyholder needs to complete the MWP Act addendum alongside the insurance application at the proposal stage. An existing term insurance policy cannot be modified into one under the MWP Act. The policy once issued under this Act also cannot be altered later.
This policy is particularly beneficial for married individuals concerned about their spouse and children’s well-being. Having such a plan ensures security from any claims made by creditors, relatives or any other legal claims.
The payout from such policies is treated as a trust which is exclusive for the nominees and ensures financial stability for them. As life insurance policies can be attached by courts to pay bank dues, experts advise those with a home loan or a business loan to opt for MWP as a bank will not be able to attach the property in case of the insured’s death.
Rakesh Goyal, director, Probus, an insurance broking firm, says the protection acts as a huge benefit specially for individuals with liabilities, as it prevents creditors from accessing the death benefits of the plan. “Eventually, the plan provides financial security for the family even in the absence of the policyholder.”
How does it work?
When policyholders purchase a term plan, they can choose anyone as their nominee such as spouse, parents, sibling, or child to receive the death benefit. However, when opting for a term insurance plan under the MWP Act, the proceeds are directly assigned to the wife or children, ensuring they receive the financial benefits without any interference in the event of the policyholder’s demise.
The life insurance policy under the MWP Act is treated as a trust.
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