In my previous write-up Life Insurance – What to look for? I introduced a term called MWPA and mentioned that it needs a separate section. So, here it is ….

What is MWPA?

MWPA stands for Married Women’s Property Act. Under this act enacted in 1874, Section 6 highlights it’s importance: a policy of insurance effected by any married man on his own life and for the benefit of his wife and/or children, shall ensure and be deemed to be a trust for their benefit according to the interests so expressed. What this act does is that it protects your family’s financial interests in your absence. If you take a life insurance policy under the MWP Act, then it may not be attached by courts for repayment of any debt under your name and only your wife and/or children are entitled to the proceeds of the sum assured in the event of the demise of policy holder.

How do you get a policy under MWP Act?

It is very simple. When a married man is purchasing life insurance, in the application form, there is a question on the same. You have to mention “Yes” and submit any documentation which may be required. Please do note that there is no additional premium to be paid for this option.

How does MWP Act protect my family?

The term policy will be considered as a trust wherein only the trustees have control on the policy. In case of a death claim, the proceeds are received by the trust and can be claimed only by the trustees. It cannot be claimed by the creditors, relatives or even be a part of the Will. Thus, the financial future of the wife and children be protected by doing this simple inclusion. After all, when you take insurance, it is for a specific purpose, therefore why not do something which will ensure the same, if there is a demise.

Who should opt for MWP Act?

• Practically any married husband who is taking the insurance policy to ensure the security of his wife and children. Even divorced persons and widowers can endorse their policy under MWP Act.
• A married woman can also buy MWP policy on her name with her children as beneficiaries, but the husband will not get anything from the policy.
• The policy under MWP Act is suitable for businessman and salaried individuals with loans and liabilities.
• Anybody wishing to protect his family and children from creditors and relatives with fraudulent intentions of usurping your money. It is very useful in a joint family setup, wherein there could be several complications in the ownership of property. There could be a scope of family disputes over money and property. Therefore, the husband can protect his family interests under the MWP Act.

What are the important points I need to be aware of regarding MWP Act?

• You cannot add MWPA later. It has to be opted for, only when you are purchasing a policy.
• The beneficiaries (wife and/or children) once mentioned in the policy remains unchanged throughout the term and also cannot be removed. Therefore, in the event of a divorce, if the married man does not want the proceeds to go to his wife and/or children, then the only option which remains is to stop paying the premiums in case of term insurance in which case the cover will lapse.
• If the beneficiary is a minor, then the appointment of the Trustee is compulsory.
• In case of any other type of insurance, whether there is a maturity benefit, the request for surrender has to come from policy holder and signed by trustees or it needs to be received from the trustees directly. The surrender proceeds would then be paid to the trust for the beneficiary of the trustees.
• You cannot assign such a policy or take a loan against it.
• There is no Married Men’s Protection Act. So, married women while taking insurance can only add their children and not their husband as beneficiaries under MWP Act.
• Only wife and/or children can be added under the MWP Act. Parents cannot be added.
• MWP act is applicable for all married women of all religions.
• If the beneficiary passes away before the policy holder, then the legal heir of the policy holder shall be entitled to receive the claim amount.

Hope this write up was useful, especially for those who are planning to take life insurance for protecting their family members. So, if you do get approached by a financial advisor (IFA) or a life insurance agent, do check with them on MWPA. There is a high possibility that either they may not be aware, or may not be recommending since there is no additional monetary benefit. But, as you would have seen the benefits of endorsing under MWP Act fat outweighs the negatives and therefore there is no compelling reason for someone not to endorse it.

To read more such blogs on personal finance topics, please visit my website: www.financialradiance.com. For any queries, please write to rajeshminocha@financialradiance.com