Why & How to Buying Term Insurance Plan Under MWP Act, 1874
Are our families not at their happiest when all of us are together? Your family not just cherishes your presence emotionally, but they might also depend on you financially as you could be the sole breadwinner in the family. While you are around, you would always wish for the well-being of your loved ones and try to fulfil all of their needs. However, have you imagined how things could change if something goes wrong?
One of the ideal ways in which you can protect your spouse and your children is by availing a term insurance plan under the MWP Act, 1874. It ensures that the insurance benefit pay-out will reach your wife and children and not end up with other family members who could also take claim to the insurance pay-outs in the absence of MWP Act’s protection.
Here is everything you must know about the Married Woman Property Act, 1874:
What is the MWP Act?
The MWP Act, 1874 ensures that deceased husband’s property goes to his wife and/or children. The prime motive of this Act is to avoid dispute between family members for claiming the property or money left behind by the husband. Life insurance policies have been included under the MWP Act, 1874.
If a married man purchases a term insurance under the MWP Act, the proceeds from the insurance cannot be used to repay his debts. The policy is ideal for breadwinners who have huge credits and liabilities and want to provide their loved one’s with financial security in case of their sudden demise.
Let us take a look at the reasons to buy term insurance under this Act:
Reason to buy term plan under the MWP Act:
Term insurance protects your families in two different scenarios:
1. On the death of the policyholder, there could be family disputes over the inheritance, including insurance pay-out. An insurance policy under the MWP Act ensures that the death benefit pay-out remains safe and can be used exclusively by the wife and/or children.
2. When the policyholder has taken a massive credit or a loan from a bank, the insurance pay-out or a part of it can be claimed by the bank as repayment of the loan. However, in case of a life insurance bought under the MWP Act, they cannot make such a claim.
When you avail term insurance plan under MWP Act, your intended money is accessible only to your beneficiaries. The policyholder can cover the following beneficiaries under the MWP Act, 1874:
1. His wife
2. His children
3. His wife and his children, together
On the other hand, the policyholder can list down 2-3 people as trustees. The trustee can either be a financial institution like a bank or a beneficiary. However, the approval of the trustee needs to be documented along with the addendum of the MWP Act.
How to avail term plan under MWP Act, 1874?
Step 1: Fill the MWP addendum along with the proposal form of your chosen term plan. The form is available with the insurer, or one can download it directly from the website of the insurer.
Step 2: Submit the details of the trustee and beneficiaries. Once the beneficiaries are selected, you cannot change them. However, the trustees are changeable.
To sum up, term plans work for the betterment of the entire family. However, there could be times when term plans fail to protect your nominees/beneficiaries under certain circumstances like medical emergencies, permanent or temporary disability and so forth. Availing a term policy under the MWP Act ensures special attention to all your dearest ones. Term plan is one of the most convenient, and affordable solution.
Note: For more details on applicability of Married Women's Property Act, please seek professional legal advice.
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