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Term life insurance helps you financially secure your loved ones so they can lead a dignified life in your absence. A term policy can be used for multiple needs like covering the costs of education, paying rent, helping your spouse start a business, travelling, and much more. While you can always pick a high sum assured to ensure that all of your family’s needs are met, you should also make sure that they get access to this sum assured under all circumstances.
Sometimes, term insurance benefits might not reach your spouse or children. Creditors or your relatives might claim this money and leave your wife and children with no financial security. Thankfully, term plans in India offer the option to secure your policy under the MWP Act.
Find out more about this Act and how it can help you.
The Married Women’s Property Act (MWP Act) states that the earnings of a married woman are her property alone, and no one else can claim them. In 1923, an amendment was added to the Act that stated that the proceeds from the husband’s life insurance policy would be treated as the wife’s property and cannot be claimed by any other person.
In other words, the death benefit received by a wife from her husband’s life insurance plan can only be used by her to cover her own expenses and those of her children. She is not liable to pay off her husband’s debts from the insurance proceeds, and no other person can claim this money other than the wife.
The MWP Act in insurance ensures that your wife and children have a security blanket to depend on. The money from term insurance plans under MWP Act is given to the wife and children of the deceased. No other creditor can claim a share in the insurance payout of such a policy. Hence, even if the husband has unpaid debt in his name, creditors cannot claim the insurance payouts to cover the debt.
When you purchase a term insurance plan secured under the MWP Act, you ensure that your family is secured against all odds in your absence. Term insurance plans under MWP Act are not included in your estate. Therefore, regardless of whether you have a pending personal loan or business dues, no lender can ask for a stake in the policy. Your family remains financially protected with the insurance money and can carry on their lives as they wish.
Purchasing a term policy under the MWP Act may be advised for all married men. Divorced men and widowers can also purchase a term plan under the Act. The MWP Act can be particularly important for the following people:
Salaried individuals: Most salaried individuals resort to loans to fulfil their goals. Personal loans, home loans, car loans, etc., can be helpful financial products to cater to your needs. However, in the unfortunate event of death, the responsibility to pay these loans can fall onto your wife or children. The MWP Act ensures that your wife and children are not burdened by your loans and can use the money for their personal requirements without having to pay your lenders.
Business owners/ self-employed individuals: Business owners and self-employed individuals may have several loans and debts in their name. In your absence, your creditors would claim your insurance proceeds to cover these loans. However, a term plan under the MWP Act will restrict them from doing so.
People living in joint family setups: A joint family setup can be a bit tricky. There have been many notorious cases where the wife and children were not given a stake in the family property after the husband’s death. A term plan secured under the MWP Act will guarantee# that your wife and children have enough funds to sustain themselves and carry on with their lives. It also eliminates the chances of other family members misusing your insurance money and reduces unwanted family disputes.
You can add your wife and children as nominees under the MWP Act. No other family member or acquaintance can be secured under the MWP Act.
It is very easy to buy a term policy under the MWP Act. You do not need to follow any special procedure, just the steps given below:
Look for an insurance company that offers term insurance plans under MWP Act.
When filling out the policy form, look for the MWP Act segment. There will be a question that asks you if you wish to purchase your term plan under the MWP Act.
Select - Yes.
Enter the name of the nominee – your wife or children. You will also need to mention their date of birth, their relationship with you, and their share in your insurance payout.
Once your policy is active, your nominees will be automatically secured under the Act.
As important as it is to invest in a good term insurance plan, it is equally important to secure it with the MWP Act to protect your loved ones fully. The MWP Act can help and empower vulnerable grieving family and help them move on to the next chapter of their lives.
Tata AIA life insurance plans let you safeguard your loved ones with excellent features, affordable premiums, and a large sum assured. They also let you add your wife and children as nominees under the MWP Act and protect them from creditors in your absence. So, go ahead and start investing in a term insurance plan as soon as you can!
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The products are underwritten by Tata AIA Life Insurance Company Ltd.
The plans are not a guaranteed issuance plan, and they will be subject to Company’s underwriting and acceptance.
For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.
This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.