Married Woman Property (MWP Act), 1874
We all have various liabilities and assets in our life and we try our best to reduce the liabilities and increase the assets over the time but sometimes this does not happen and our liabilities surpass the assets. However we can manage this by compromising our life style and improvising savings but what would happen if you die and the responsibility of paying off the liability goes to your spouse? All the assets you built over your life would then be used to pay off the liability and your spouse and children would be left with nothing. This would be the worst scenario that anyone can think off but despite of thinking you can take actions and secure their life after you demise.
One thing we all do is insuring our life with insurance policy whether it is term insurance plans, ULIP, Endowment Plans or Money Back Plans. The insurance policy smoothen the life of your depends after your death, so one should take utmost care while deciding the insurance amount. But in case you die leaving liabilities exceeding your assets including your policy amount than this insurance amount would also be useless for your loved ones. In this scenario, Married Women Protection Act, 1874?comes into picture.
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- How Married Women Protection Act, 1874 safeguard Women?s Interest?
- Who can be beneficiaries (nominees) and turstee under MWP Act?
- How to get Life Insurance Policy covered under MWP Act?
How Married Women Protection Act, 1874 safeguard Women?s Interest?
Section 6 under Married Women Protection Act, 1874 safeguard women?s right on the property owned by her from creditors, relatives or even from her own husband. MWP is applicable to all the married women irrespective of any religion, caste or creed throughout India and excluding the state of Jammu and Kashmir.
MWP provides that the benefits (maturity or death) of life insurance policy taken by a married man on his own life taken under MWP act would be entrusted to his wife and children only and in no case the same shall form part of the man?s estate. The claim proceeds thus remain free from the creditors including financial institutions, court or tax attachments.
If you take life insurance policy under MWP act, then the same shall be treated as TRUST and the policy benefits shall only be awarded to the beneficiaries (nominees).
Who can be beneficiaries (nominees) and turstee under MWP Act?
The beneficiaries under MWP Act policies can be
- Wife alone,
- Any one or more children alone, or (both natural and adopted)
- Wife and any one or more children.
If there are two or more beneficiaries, they may be given equal share, specified unequal shares or where the proposer belongs to a community other than Mohammedanl, he can provide that the benefit should go to the Beneficiaries jointly or to the survivors or survivor of them.
The point to note is that beneficiaries should be named only at the time of taking policies and not later on. This means that the existing life insurance policies cannot be covered under MWP Act.
Trustee can be the wife and/or one or more of his adult children, or a third person like Bank or Trustee Company etc. which can be changed anytime by you (proposer). Appointment of Trustee is not compulsory except where the beneficiary is a minor. However, you can also appoint beneficiaries who are major as sole trustee or one of the trustees.
How to get Life Insurance Policy covered under MWP Act?
To get your Life Insurance Policy covered under MWP Act, all you need to do is file ?Addendum to proposal form for policy under Married Women?s Property Act,1874 (MWP)?. You will have to state the name of beneficiaries, their respective share of benefits and the name of trustees with their signature on acceptance to act as trustee such as your wife can be beneficiary as well as trustee.[AdSense-A]
Format of the Addendum is given below:
Every policyholder can adopt this route to protect his family?s interest and does not have to incur any additional cost for the purpose.
Changing or Adding Beneficiaries & Trustees Later On:
Names of the beneficiaries shall be mentioned only at the time of buying policy and cannot be added or changed later on. The beneficiary can be a minor but a trustee is required to be appointed in case of minor beneficiary which should not be a minor or HUF.
Names of the Trustees can be removed, added or changed even after buying policy.
Can loan be taken against the MWP covered Policy?
Since the sole motto of MWP act is to secure the right of women against all the liabilities thus there is no question of mortgaging/hypothecating or using MWP covered life insurance policy as collateral security for any loan.
However, if the loan request comes from you and signed by all the beneficiaries and trustees than the loan request can be processed.
Can MWP covered Policy can be surrendered?
Similar to the loan procedure, if beneficiaries and trustees agree to surrender the policy, than the policy can be surrendered. The surrender value shall be given to the trustees/beneficiaries.
Usage of MWP Act Clause
Not many people know about MWP act and thus the usage of MWP act is very less. Further, once the policy gets covered under MWP act, proposer loses the control to change or make alterations in the policy with the exception of paying premiums thus many policy holders do not find it useful to get their policy covered under MWP Act.
- ?Married man? would also include widower or a divorced man.
- The term ?children? in Section 6 of the said Act means sons and daughters by blood and in case of Hindus it includes adopted sons and daughters.
- The issue of policies to residents outside India is subject to this being permissible under the Exchange Control Regulations, if any, and the other laws in force in the territory concerned.
- All the Life Insurance Policies including Online Policies can be covered under MWP Act.
- In case beneficiary also dies then the policy proceeds will be distributed to the legal heirs of the beneficiary.
- Married Women can also buy life insurance policy under MWP act on her name with her children as beneficiaries; though the husband will not be entitled for any benefit from the policy.
- If the policy is money back policy or endowment policy or ULIP, the maturity benefit will go to the beneficiaries even if the policy holder survives.