FAQs Regarding The MWP Act, 1874
A life insurance plan helps ensure the financial stability of your dependents in the event of your untimely demise. However, if you have outstanding debts and loans, your creditors may be eligible to lay the first claim on the sum assured proceeds from your policy. This will leave your dependents financially stranded and defeat the core purpose of buying a life insurance plan. To help avoid this predicament, you can opt for a policy under the Married Women’s Property (MWP) Act of 1874.
What is The MWP Act?
Understanding the value of a plan linked with the MWP Act is quite simple. For instance, if you are a salaried individual with an outstanding home loan and other accumulated debts, your untimely demise would warrant your creditors to lay claim to your policy payout as debt repayment. This would jeopardize the financial stability of your wife and kids.
However, if you buy a policy under the MWP Act, you get to protect the sum assured payout from the plan from any third-party claims. Thus, the proceeds from such plans are completely reserved for your listed beneficiaries, i.e., your wife and/or kids.
How Does a Policy under the MWP Act Secure the Financial Future of Your Dependents?
Understanding the value of a plan linked with the MWP Act is quite simple. For instance, you are a salaried individual who has an outstanding home loan as well as other accumulated debts. In the event of your untimely demise, your creditors would get to claim the death benefit payout from your policy as debt repayment. This would jeopardize the financial stability of your wife and kids. However, if you buy a policy under the MWP Act, you get to protect the sum assured payout from the plan from any third-party claims. The proceeds from the plan are solely reserved for your listed beneficiaries, i.e. your wife and/or kids.
1. Who can purchase a life insurance policy under the MWP Act?
If you are currently living in India and a married man, you are eligible to buy a policy under Sec 6 of the MWP Act.
Additionally, you can also purchase a term life insurance plan under the MWP Act to safeguard the financial future of your children, even if you’re a widower or divorcee.
2. Who should opt for life insurance plans under the MWP Act1?
Life insurance plans under the MWP Act are apt for the following types of people:
- Salaried employees or businessmen with outstanding debts and loan liabilities.
- Those who wish to protect the financial future of their dependents and preserve their claim to the policy payout.
- Those buying term life insurance plans as the sizable payout from such policies can help your loved ones achieve their life goals even in your absence.
3. Can I take a loan against a policy that’s under the MWP Act2?
No. Life insurance policies under the MWP Act cannot be used as collateral or guarantees for loans.
4. Can I surrender an insurance policy that’s covered by the Married Women’s Property Act4?
Yes. However, you can only surrender policies under the MWP Act if the surrender request is initiated by the policyholder and signed by all the policy beneficiaries and Trustee, if appointed. The beneficiary listed under the policy, should be major at the time of the request. The surrender value of the plan will be paid out to the beneficiary/trustee and the maturity benefits will go to the Trust.
5. Who can I name as beneficiaries of policies under the MWP Act3?
Life insurance plans under the MWP Act help take care of your dependents in your absence. The proceeds from such plans help maintain their financial stability in tough times. Thus, your wife, your child/children, or both your wife and children can be named as beneficiaries for policies under the MWP Act. You can either assign proportions of the sum assured to the different beneficiaries or opt for it to be equally divided among the beneficiaries.
6. What happens if I name my wife as the policy beneficiary, and we later end up divorcing4?
For policies bought under the MWP Act, once you’ve named your beneficiary, you cannot change it at a later date. This implies that if you have named your wife as the sole beneficiary of your policy under this Act, she will be entitled to the policy payout even if you both are divorced.
7. What happens if my wife as the policy beneficiary dies before me4?
In such cases, your legal heir will be entitled to the policy payout sum. However, to avoid any confusion, it is always prudent to list more than one beneficiary while buying a life insurance policy.
Summing It Up
Life insurance policies under the MWP Act help create a safety net for your loved ones. You can ensure that your loved ones meet their life goals by simply filling in an addendum while applying for a new insurance policy. Additionally, you can buy more than one insurance policy under the MWP Act to ensure that the sum assured from such policies reaches your wife and children and can be used for their welfare.
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