FAQs Regarding The MWP Act, 1874

What is The MWP Act?

Understanding the value of a plan linked with the MWP Act is quite simple. The Act protects the claim amount from creditors by creating a trust where the claim amount may only be used for the benefit of your spouse and children. For instance, if you have an outstanding personal loan and other accumulated debts, your untimely demise would leave your debts unpaid. Your creditors might 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, the claim amount is protected from any third-party claims.

 

MWP-Related FAQs (H2)

Here are some common FAQs of the MWP Act –

 

1.  Who can purchase a life insurance policy under the MWP Act?

If you are a married man and you wish to secure the lives of your wife and/or children, you can avail yourself of a term life insurance plan under the MWP Act under the MWP Act by signing a MWP Addendum.

 

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?

Once a policy has been placed under the MWP Act, an irrevocable trust has been created for the benefit of your wife and/or children. What this means is that your policy is thereafter not part of your estate and is part of a separate trust. Therefore, you cannot surrender the policy.

 

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 wife and/or children 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?

Once the MWPA Addendum has been endorsed onto the Policy, it creates an irrevocable trust. Accordingly, you cannot change the beneficiary of that specific policy. In the event you end up Divorcing your wife, the status of her as beneficiary of this policy will not change.

 

7.  What happens if my wife as the policy beneficiary dies before me⁴? 

In such cases, your wife’s legal heirs will be entitled to the policy payout sum. 

 

8.  What are the benefits of using MWP?

The MWP Act ensures life insurance proceeds go directly to your spouse, children, or both, offering them financial security in your absence. With the MWP Act, you can protect your policy proceeds against claims from creditors and other family members.

 

Key Takeaways

1. The MWP Act, 1874 protects life insurance proceeds for a wife and children from creditors and debts.
2. Policies under the Act automatically act as a trust, ensuring payouts go directly to beneficiaries.
3. These plans are ideal for salaried employees or business owners with debts, or anyone wanting to secure their dependents’ financial future.
4. Beneficiaries can include wife, children, or both, with options to divide the sum assured.
5. Named beneficiaries cannot be changed once the policy is in force.

 

Conclusion

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.