MWP Act Term Life Insurance Plan

The purpose of buying a term insurance plan is to keep your family financially secure when you are not around anymore. It is a way of showing your loved ones that you will continue to care for them and help them avoid a financial crisis because of your death.

So, you choose a sufficient cover amount, customise the plan with the right add-ons, and do not miss out on paying premiums. You do all this so that your family does not face any financial issues if you, unfortunately, pass away.

But, did you know there are ways in which they might not be able to utilise the returns despite your efforts? Yes, sadly that is a possibility! There are chances that other family members might claim to be the right persons to receive the claim amount, or creditors can swoop in for repayments even before your family receives the amount.

So how does one make sure that your spouse actually enjoys the benefits of the policy? If you are a married male, then the Married Women’s Property (MWP) Act can save the day. Let us find out how.

What Is The MWP Act?

The Married Women's Property Act is a beneficial law that grants special rights to married women. If you choose to purchase your policy under this act, simply sign an additional addendum along with your proposal form. By doing so, the sum assured under the policy can only be claimed by your wife and children, as specified in the addendum. It's important to note that no other individual, institution, or family member can use the proceeds to settle any loans or debts.

Let us understand this better with an example: Example Shivin, aged 28, buys a term insurance policy with a cover amount of Rs. 2 crores without signing the MWP addendum. He also has a business loan of Rs. 35 lakhs. Now, say, he passes away four years after he has bought the term insurance plan. This is how the claim will be paid:

👉The bank has the right to claim its loan dues of Rs. 35 lakhs from the claim settlement.

👉The balance of Rs. 1.65 crores will be provided to Shivin’s family as a claim settlement amount.

If Shivin had signed the MWP addendum while buying the policy, his wife and children would have owned the right to claim the entire settlement of the policy. And, it would not have been a compulsion but a choice for his family when to settle the loan amount dues.

How Does The MWP Act Protect My Family?

The MWP Act is designed to safeguard the financial well-being of your wife and children by establishing a trust. This ensures that the claim amount from a term insurance policy is solely allocated for the benefit of your wife and children, and cannot be claimed by your creditors.

How Do You Buy Term Insurance Under The MWP Act?

If you're considering buying a term insurance plan under the MWP Act, the process is actually pretty straightforward and hassle-free, much like purchasing a regular term insurance policy. Here's a step-by-step guide on how you can get going -

1. Choose the term insurance plan you prefer from the insurance provider of your choice.

2. Fill the insurance proposal form of the chosen insurer.

3. In the form, you will come across a question asking if you would like to purchase the policy under the Married Women's Property Act.

4. Simply select "YES" for this question.

5. Next, enter beneficiary details such as name, relationship, date of birth, and benefit share (in %).

6. Click on Submit to complete the application process.

Who Should Opt For The Married Women's Property Act?

The MWP Act is a great choice for married men like you who wish to ensure financial security for their wife and children. This act proves especially advantageous for those who want to safeguard the insurance proceeds from any potential creditors or legal obligations.

Benefits Of Buying Insurance With The MWP Act

Here are some of the remarkable benefits of the MWP Act -

• Protection of Claim Amount: The MWP Act ensures that your insurance benefits are protected from creditors and legal claims made against you.

• Financial Security: The insurance proceeds are solely dedicated to your wife and children, offering them the much-needed stability in terms of finances.

• Estate Planning: With MWP, you can smartly plan your estate and ensure a seamless transfer of benefits to your chosen beneficiaries.

How To Get A Life Insurance Policy Under MWP?

As discussed previously, if you're buying a life insurance policy, you'll want to make sure you include the MWP clause. So, all you need to do is let your insurer know your intention, and they will provide you with an addendum. Simply fill out the addendum and submit it.

Things to note while buying a term insurance plan under the MWP Act

Listed below are a few key points that you must know before signing the MWP addendum to your policy

1. The addendum is available and can be signed only at the time of buying the term insurance policy.

2. On signing of the addendum, it cannot be changed or removed by anyone. Even you cannot choose to make amendments to the addendum.

3. The MWP Act continues to stay valid and active even in the case of a divorce between the couple.

To conclude,

The MWP Act can be a ticket to your family’s financial stability in the future. Any married male who buys a term insurance policy has the prime motive of safeguarding his immediate family from any crisis or financial issues that may arise in his absence. The Act assures that your family enjoys the benefits of the policy rather than anybody else.