While your life insurance policy assures your family’s future, there is no guarantee that the benefits will be exclusively distributed to your spouse and children. Your family members, creditors, or bank may each claim a portion of the insurance benefit to pay off any outstanding debts or for other uses. Obtaining insurance under the Married Women’s Property Act, 1874 (MWP Act) safeguards the benefits exclusively for the wife and children in such a precarious circumstance.
What is the MWP (Married Women’s Protection) Act?
Married women have complete ownership of all property that they own or have a vested interest in, thanks to the Married Women’s Property Act (MWP Act). Following the marriage, neither spouse may acquire an interest in any of the wife’s assets.
Enacted in 1874, this welfare act ensured that a married woman’s wages, earnings, property, investments, and savings remained hers alone, distinct from those of her husband and relatives. As a result, her spouse, in-laws, or any other relative are precluded from asserting any claim to her property.
What is MWP Act insurance?
Section 6 of the MWP Act establishes safeguards for the benefits derived from spousal insurance purchased by the spouse. The section stipulates that if a spouse purchases an insurance policy and designates his wife and children as beneficiaries, they shall receive the death benefit and any additional incentives that may result from the policy exclusively. This amount is deemed to be extinguished from the husband’s possession, and his creditors are precluded from claiming any portion of it to satisfy the husband’s obligations and debts.
Who should opt for insurance under the MWP Act?
The following people should consider buying insurance under the MWP Act:
- Individuals who reside in joint families or have close relatives should contemplate purchasing insurance under the MWP Act, given the potential for numerous claimants within the family unit. This will guarantee that there are no familial disputes concerning the burial benefit after the policyholder’s demise.
- Individuals with salaried and business positions incur debts and obtain loans. Following the MWP Act, such individuals should purchase an insurance policy to prevent creditors, lenders, or banks from deducting the death benefit’s debts or liabilities.
- Individuals who are concerned that their relatives or any other individual may fraudulently or otherwise make a claim using the insurance’s benefits must obtain personal insurance per this Act. The spouse may designate his wife, children, or both of them as beneficiaries of the insurance policy.
What safeguards does the MWP Act have?
It is prudent to purchase insurance under the MWP Act to safeguard your family, particularly your dependents, against the financial strain of debts and family disputes. If the policyholder possesses any debts or liabilities, the mortality benefits of a standard life insurance policy may be utilised by the creditors to recover the amount owed. However, in the case of an insurance policy under the MWP Act, the death benefit shall belong solely to the spouse and children. The parents or creditors of the spouse are not entitled to any portion of the benefit in their recovery. The insurance benefit is to be transferred exclusively to the spouse and offspring.
Therefore, by purchasing insurance under the MWP Act, you safeguard your spouse and children’s financial future in the event of an unforeseen circumstance.
Who Can You Name as Beneficiaries in Insurance Under the MWP Act, 1874?
Under the MWP Act of India, purchasing a term plan that provides financial security for one’s family in the event of one’s demise is possible. Nominees permitted by the Act include:
- Only your wife
- Only your children (both natural as well as. adopted)
- Your wife and children together
Beneficiaries cannot be altered under the MWP Act, not even in the event of a divorce. The beneficiary’s legally designated heir may claim the insurance reimbursement after their passing. When purchasing a policy, it is therefore essential to designate multiple beneficiaries under the MWP Act.
When purchasing a policy under this Act, trustees may also be added. Under the MWP Act, the trustees of an insurance policy may consist of multiple individuals, such as a financial institution or bank, or one of your nominees. Trustees are not required to be listed on the form, and the trustees may be changed at any time.
How do you buy term insurance under the MWP Act?
You will encounter the following inquiry on the application form while purchasing the policy: “I am interested in purchasing this policy under the Married Women’s Property Act of 1874.”
Simply answer “yes” to this inquiry. After being chosen, the beneficiary and trustee information must be entered, including the beneficiary’s name, relationship, date of birth, and benefit share (in per cent). As beneficiaries, only your spouse, child, or children are permitted. It is possible to designate multiple beneficiaries.
Do take care of the following pointers:
Understand The MWP Act Provision
When assessing term insurance policies, search for one that specifies adherence to the MWP Act 1874. Verify that the policy permits the designation of your spouse and children as beneficiaries by this act.
Select The Sum Guaranteed
Assess the financial requirements of your family, including liabilities, future objectives, and living expenses, to ascertain a suitable sum assured. Even in your absence, the selected coverage should be adequate to meet these requirements.
Complete the application
Precisely complete the insurance application form by supplying all requisite personal and financial information. Pre-existing medical conditions must be disclosed; failure to do so could result in denial of the claim.
Beneficiaries Nominated Under The MWP Act
Indicate on the nomination form that the policy was purchased following the MWP Act of 1874, and designate your spouse and children as beneficiaries. Seek guidance from your insurance advisor to verify the proper execution of the nomination process.
Comply With The Premium
Select a premium payment schedule (monthly, quarterly, or yearly) using the designated method. You must comprehend and abide by the grace period designated for premium payment to sustain the policy.
Analyze the Policy
Review the policy documents and their terms and conditions in their entirety. Confirm that the policy explicitly specifies adherence to the MWP Act of 1874 and that the designated beneficiaries are mentioned accurately.
Regularly Update the Policy
Notify the insurance provider without delay of any modifications to personally identifiable information, including marital status, address, or contact details. To prevent complications during the claim settlement procedure, ensure that the policy is current.
What other laws did the MWP Act enact?
These are some of the other laws enacted by the MWP Act:
Right to opt for Insurance
Additionally, married women are permitted to acquire and own an independent life insurance policy under the MWP Act. A woman may not be obligated to rely on her spouse to purchase an insurance policy after they are married. The policy benefits acquired by the woman are exclusively hers to assert. This is comparable to an unmarried woman possessing a life insurance policy, as married women were not permitted to enter into independent contracts before the Act.
Ownership over Earnings
The Married Women’s Property laws designate the earnings of a married woman as her personal property. Her earnings shall constitute her solitary property, and she shall be permitted to engage in any trade or occupation, provided they are separate from her spouse’s. Therefore, her spouse or any other entity is precluded from asserting any claims on her assets or earnings, including savings or investments made through diverse channels. All of these are protected property for her under the Act.
Initiate Legal Proceedings
The MWP Act provides women with the authority and functionality to commence legal proceedings. This provision was established to assist married women’s property owners in pursuing legal assistance on their own to reclaim their separate assets, regardless of whether they acquired them under the Married Women’s Property Act or the Indian Succession Act. The woman may start legal proceedings in either a civil or criminal capacity to regain ownership.
Insurance for Married Women
In the past, before the enactment of the Act, in the event of the demise of a married man without satisfying his debts, his creditors would be entitled to seize his assets and property, including the benefits of his life insurance policy. However, per Section 6 of the Act, the man’s life insurance policy proceeds are not available for distribution to his creditors and must go to his wife and/or children instead.
Husband’s Liability for Breach of Trust
Additionally, the liability of the spouse is clarified in the MWPA when his wife is designated as the beneficiary and trustee of the life insurance policy. According to the provision, if his wife breaches the trust or misuses the proceeds of the life insurance policy, the spouse cannot be held culpable because he has no claim over the benefits and is not engaged in the administration of the policy.
Husband’s Liability for Ante-Nuptial Debts
Additionally, the Act specifies that a spouse cannot be held guilty for premarital debts that his wife has not yet repaid. Even after matrimony, an unmarried woman who obtains a credit or a loan will continue to be subject to the same liability to be sued for non-payment of the debts as an unmarried woman. Therefore, unless otherwise specified, the spouse is not obligated to repay debts following their marriage.
Liability for Post-Nuptial Debts
In addition to enumerating the rights and responsibilities of married women, the MWP Act of 1874 also specifies their liabilities. Similar to prosecuting an unmarried woman for the losses, if a married woman enters into a contract or agreement concerning her property and fails to honour her repayment obligations, the other party to the agreement may sue her for the damages.
Illustration:
Consider the following scenario: A few years ago, Mr. Ashok, a salaried individual, obtained a home loan. Under the MWP Act, he purchased a term insurance policy online and designated his spouse and child as beneficiaries. The bank petitioned the court, following the untimely death of Mr. Ashok, to discharge the mortgage using the policy proceeds. The case was dismissed in their favour, and the proceeds were distributed to his spouse and child, who were afforded protection under the MWP Act.
In an alternative scenario, suppose that Mr. Kumar is a merchant who obtained a loan to finance the expansion of his company. Under the MWP Act of 1874, he purchased an online term insurance policy designating his spouse as the beneficiary. In the aftermath of his untimely death, his creditors petitioned the court for payment of their claim using the term insurance policy’s proceeds. The creditors lost the case due to the policy’s coverage under the MWP Act; consequently, the court ordered the payment of the sum assured to his wife.
In both of the aforementioned situations, the MWP Act of 1874 was instrumental in safeguarding the families’ futures. “Buying on credit” and “constructing assets on loan” have become prevalent practices in the modern era. To accomplish objectives, both employed and business owners utilise credit (home loan, personal loan, business loan, consumer loan, etc.). How do you ensure that, in the event of your untimely demise, the insurance policy claim proceeds are distributed exclusively to your dependents? In this regard, the MWP Act of 1874 assists you in safeguarding the financial future of your family.