Marriage Women's Property Act in Term Life Insurance

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 financial crisis because of your death.

So, you choose a sufficient cover amount, customize 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 utilize the returns in spite of 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 actually 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 Married Women’s Property Act?

The Married Women’s Property Act imposes certain rights for married women. You can protect your family under this Act by signing an extra addendum along with your insurance proposal form. It ensures that your wife and children receive the benefits of the policy and it is protected from other family members or creditors claiming a right to it. It is a clever way of keeping your loved ones financially secure without others misusing the claim.

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’ve 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.

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.