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Married Women's Property Act, 1874

Consider the case of Mr. Rajesh Sharma who had bought a term insurance plan to financially secure his family. However, his wife and children did not get any money upon his death. This happened since Mr. Sharma’s money was claimed by his creditors for repayment of his debt for an active home loan.  

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You can ensure the financial protection of your family by buying a life insurance policy under the Married Women’s Property Act, 1874. Protection under the MWP Act can be opted for only at the time of purchase of the policy and not at a later date.

What is the Married Women’s Property Act (MWP Act 1974)?

The Married Women's Property Act, 1874 is effective to all married women living in India. It came into effect to help secure the assets owned by a woman against her husband, his creditors, and relatives.

As per Section 6 of the Act, “a policy of insurance will come into effect by any married woman on her behalf and freely of her husband. Moreover, all the benefits, therefrom, if expressed on the face of it to be so in effect, must make sure as her discrete property, and the agreement evidenced by this policy must be valid as if made with an unmarried female.” This Act can be applied to both term insurance and life insurance, and upon application, the courts cannot attach it to your insurance for debt repayments after your death. In simple words, if you avail the MWP Act in insurance, then the sum assured will only be claimed by your wife and/or children and no creditor will be able to put hands on the amount. The Act, furthermore, makes sure that no liability (debt payoff, joint family rights, loan payoff, etc.) is attached to the policy amount.

How Does the Married Women’s Property Act Protect Your Family?

If you are a salaried person with a home/personal loan or the owner of a firm and have accumulated liabilities in the form of debt, your creditors will have the first claim on your policy proceeds in the event of your death.

The term plan under the MWP Act is considered a form of trust. In the event of a death claim, the proceeds are handled by the trust, then, only be claimed by the agents or the trustees. It cannot be claimed by relatives, creditors, or the proposer’s estate. The trust is liable to hold the claim profits for the assistance of the children and/or wife. Now, the financial future of your family (children and wife) is secured.

When you buy term plan online under MWP Act, your children and/or wife will only have the access to the amount of claim that enables you to protect their future.

This is also a smart idea for a joint family, where there might be various complications in property ownership. Some of the fine prints are not being listed thereby, increasing the possibility of disputes in the family over property and money. In such situations, a plan covered under this Act will give a rich idea to the nominee/beneficiary. 

The receivers (children and/or wife) once stated in the plan remain unaffected throughout the tenure. After the issuance of the policy, it will not be considered as a share of the business assets of the insured. This simply means that nobody exercises control over the amount of benefit in the case of the insured’s death (except the wife of the life assured and children). 

Benefits of Purchasing Insurance with the MWP Act 1874? 

Here are some of the benefits of buying term insurance with the MWP Act:

Safety from an outside death claim 

This type of policy cannot easily be cliamed by the policyholder’s relatives as it is specifically designed for the benefits of their wife and children only. 

Safety from creditors after a sudden demise 

If the policyholder left behind any unpaid debts and loans, creditors can’t claim for settlement on the term plans that are secured under MWP Act 1874. 

Safety from disputes 

If the policyholder is residing in a joint family, a plan with MWP Act in insurance will secure policyholder’s wife and children in case of any dispute in the family. 

Safety from some misunderstandings 

Plan under MWP Act can’t be made a part of the policyholder’s will as the insurance under MWP Act acts as a separate entity.

Who Should You Opt for the MWP Act?

The following individuals can opt for the married women’s property rights in India:

  • Businessman and salaried individuals with loans or liabilities.

  • People who want to protect their wife/children from creditors/relatives who might have fraudulent intentions.

  • People who live in a joint family setup where there could be several complications in the ownership of property and money. 

How Can The MWP Act Be Applied To Your Insurance Policy?

The Married Women's Property Act, 1874 (MWP Act) can help your wife and/or children in receiving the sum assured that you had planned on saving for their security after your death. This way, your wife/children can claim absolute ownership to the sum assured, without having to fear threats from creditors/relatives etc. To avail this feature, you can buy the policy under the MWP Act right during the initiation of the purchase.

Example 1: Mr. Ravi, who is a salaried person, took a house loan a few years back. He purchased a term plan online and authorized it under the MWP Act with his partner and the child (beneficiaries). After the death of Mr. Ravi, the bank will approach the court to clear all the home loans with the plan profits. The case got lined out against them and profits were given to his child and his wife as both were secured under the MWP Act.

Example 2: Mr. Kamal is a business owner who purchased some of the capital to increase his business. Kamal purchased a term plan online in MWP Act 1874 with his partner as the beneficiary. After the sudden demise of Mr. Kamal, his creditors contacted the court and pursued their right to pay all his term insurance proceeds. Since the plan was covered in MWP Act, the creditors lost the case and the benefit of SA was provided to his wife.

In the above mentioned cases, the MWP Act 1874 played a very important role in securing the loved one’s future. Nowadays, ‘building money on loan’ and ‘buying on credit’ has become very common. Business people and employed persons rely on personal loans, home loans, consumer loans, and business loans to fulfill their objectives. In such cases, how will you ensure that only your dependents collect the claim profits of the plan in case of unfortunate death? This is the time when MWP Act 1874 comes into play and it helps protect the future of your family financially.

Who Can You Make Your Beneficiaries in Insurance Under Married Property Act, 1874?

The beneficiaries can only be:

  • Only wife

  • Only children, whether they are natural or adopted

  • wife /child/natural or adopted children

Beneficiaries decided and nominated once cannot be changed throughout the term of the policy. 

In case of getting divorced, wife continues to remain a beneficiary that can’t be changed. 

In case of an early death of the beneficiary wife, the policyholder’s legal heir is liable to claim insurance money. Thus, it is essential to declare more than 1 beneficiary at the time of purchasing term insurance plan.

Wrapping It Up! 

As per the above discussion, purchasing a term insurance plan under the MWP i.e., Married Women’s Property Act 1874 helps in securing the financial interests of your family in your absence. Once the plan is availed under the MWP Act, it might not be attached by the courts for the debt repayments. Your children and wife are eligible for the sum assured amount in case of your demise.

Married Women’s Property Act - FAQs

  • Ans: No, a policy covered under MWP Act 1974 cannot be assigned to someone else.
  • Ans: No, a loan cannot be taken under a policy covered under MWP Act 1974.  
  • Ans: If your beneficiary (wife) passes away before you, the legal heir of the policyholder shall be eligible to receive the claim amount. 
  • Ans: Yes, you can have more than one plan under the MWPA act.
  • Ans:No. Once a policy has been issued, it cannot be assigned under MWPA at a later date. You have to opt for MWPA only at the inception.

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