If you are planning to buy a term insurance policy for the financial protection of your wife and children in your absence, ensure that you buy the policy under the Married Women’s Property Act (MWPA), 1874. In this, the claim amount will go to them only and no creditor of any outstanding loan of yours can stake claim to the proceeds after your demise.

In a normal term insurance cover, the sum assured can be claimed by your creditors or attached by the court for repayment of your outstanding loans. If an individual has an outstanding of any type, the creditors will have the first claim on the insurance policy proceeds in the event of the insured’s death. An insurance policy under MWPA will insulate the insured’s wife and children from any loans or liabilities that he owes and their financial future will be protected. Only beneficiaries mentioned by the insured will get the insurance proceeds after his death and neither the creditors or any government agencies will have a claim or control over the policy proceeds.

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How does it work
A married man who is a resident of India (except Jammu and Kashmir) can buy the term insurance policy under the MWPA. Even a divorcee or a widower can buy the policy and name his children as beneficiaries. The insured will have to assign specific percentages of the sum assured to each beneficiary. However, a wife cannot make her husband the beneficiary and take the benefit of this Act. She can buy a policy under the MWP Act in her name and make her children the beneficiaries. The policy is beneficial for both salaried and self-employed individuals.

At the time of purchasing the cover, one has to fill in a MWP addendum. However, after taking the policy under the MWP Act, he cannot make any additional changes in the endorsement of the policy and an existing term insurance policy modified under MWP Act. As the beneficiary opted at the time of taking the policy cannot be changed, in case of divorce, the insured’s beneficiary, which is his wife, will remain the same. In this policy, the husband’s parents cannot be added as beneficiaries and they will not have any right to the insurance proceeds.

Points to note
The insurance policy covered under MWP Act cannot be assigned to another person and the policyholder will not be able to take any loan against this policy. If the insured wife passes away before him, the legal heir of the policyholder will receive the claim amount. Experts suggest it is always advisable to mention more than one beneficiary at the time of buying the policy.

Experts say there is not much awareness about life insurance under the MWP Act. So, as life insurance is an ideal instrument to protect the financial future of one’s family members, a married man must opt for this cover.