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How can I buy a life policy under the Married Women’s Property Act?

The MWP Act was enacted with a view to protect the properties of women against the creditors
By OLM Desk | April 21, 2017

How can I buy a life policy under the Married Women’s Property Act?

Reema Gandhi, Chandigarh

The Married Women's Property (MWP) Act was enacted with a view to protect the properties of women against the creditors. Under MWP Act all the properties that belong to the women gets insulated and protected from all the other court attachments or any income tax department attachments that the husband has run up.

You cannot buy any policy under this act. Here are some provisions of the policy you might find relevant. Under Section 6 of the Married Women’s Property Act 1874, if a married man buys a policy insuring him and states clearly in the policy that it is for the benefit of his wife and children, the policy is considered as a trust set up for the benefit of his wife and children. The Married Women’s Property Act further provides that during the lifetime of the wife, children or both as the case may be, neither the insured nor his creditors will have any control over the policy.

To understand this Act’s benefits assume that your husband runs a business, which means borrowings from banks and creditors is par for course. Typically, such loans are secured by lenders against business assets and personal guarantee of the owner of the business which includes family assets. Now in case of an unfortunate incident, if the husband dies or the business collapses, the lenders get into the act of recovering the loan by liquidating the assets that were taken in as guarantee or collaterals. To protect the family; life insurance policies that your husband takes should be under the Married Women’s Property Act, because life insurance policies are also entitled to be attached, which means that the claims that paid out on the death of the husband, goes to the bank and not to the surviving members if the policy has been used as a guarantee or collateral.

The process of taking the policy under MWP is very simple. At the time of making an application one has to fill in MWP addendum. This form is also provided by life insurance companies. In the form, your husband needs to fill in the details of you and children, whoever he wishes to make beneficiaries in the policy. In case of death, the policy proceeds do not go to anybody else other than the beneficiary as named in the policy. There is no attachment in case of loan recovery, because the policy does not belong to the husband.

 

olmdesk@outlookindia.com

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