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Consider the case of Mr. Rajesh Sharma who had bought a term insurance plan to financially secure his family. However, his wife and children did not get any money upon his death. This happened since Mr. Sharma’s money was claimed by his creditors for repayment of his debt for an active home loan.
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You can ensure the financial protection of your family by buying a life insurance policy under the Married Women’s Property Act, 1874. Protection under the MWP Act can be opted for only at the time of purchase of the policy and not at a later date.
Term Plans
The MWPA full form is Married Women's Property Act, 1874, and it is effective to all married women living in India. It came into effect to help secure the assets owned by a woman against her husband, his creditors, and relatives.
As per Section 6 of the Act, “a policy of insurance will come into effect by any married woman on her behalf and freely of her husband. Moreover, all the benefits, therefrom, if expressed on the face of it to be so in effect, must make sure as her discrete property, and the agreement evidenced by this policy must be valid as if made with an unmarried female.” This Act can be applied to both term insurance and life insurance, and upon application, the courts cannot attach it to your insurance for debt repayments after your death. In simple words, if you avail the MWP Act in insurance, then the sum assured will only be claimed by your wife and/or children and no creditor will be able to put hands on the amount. The Act, furthermore, makes sure that no liability (debt payoff, joint family rights, loan payoff, etc.) is attached to the policy amount.
Note: Now that you know that what is Married Women’s Property Act you should also know about what is term insurance before buying any term plan for your loved ones.
A married woman is allowed to take an insurance policy in her own name, independently of her husband. If the policy clearly states that it is for her own benefit, it will be treated as her own separate property.
This means the policy belongs to her alone and is legally treated as if she were unmarried, giving her full control over it.
Subsection (1): If a married man takes an insurance policy on his life and states that it is for the benefit of his wife or his wife and children, it creates a trust.
This means the policy is legally meant for their benefit and cannot be controlled by the husband or claimed by his creditors.
The proceeds from the policy, when payable, will be held in trust (either by special trustees or the Official Trustee appointed by the State).
This protection ensures that the money goes to the wife and/or children as intended, even if the husband has debts or financial issues.
If you are a salaried person with a home/personal loan or the owner of a firm and have accumulated liabilities in the form of debt, your creditors will have the first claim on your policy proceeds in the event of your death.
The term plan under the MWP Act is considered a form of trust. In the event of a death claim, the proceeds are handled by the trust, then, only be claimed by the agents or the trustees. It cannot be claimed by relatives, creditors, or the proposer’s estate. The trust is liable to hold the claim profits for the assistance of the children and/or wife. Now, the financial future of your family (children and wife) is secured.
When you buy term insurance plan online under MWP Act, your children and/or wife will only have the access to the amount of claim that enables you to protect their future.
This is also a smart idea for a joint family, where there might be various complications in property ownership. Some of the fine prints are not being listed thereby, increasing the possibility of disputes in the family over property and money. In such situations, a plan covered under this Act will give a rich idea to the nominee/beneficiary.
The receivers (children and/or wife) once stated in the plan remain unaffected throughout the tenure. After the issuance of the policy, it will not be considered as a share of the business assets of the insured. This simply means that nobody exercises control over the amount of benefit in the case of the insured’s death (except the wife of the life assured and children).
Here are some of the benefits of buying term insurance with the MWP Act:
Safety from an outside death claim
This type of policy cannot easily be cliamed by the policyholder’s relatives as it is specifically designed for the benefits of their wife and children only.
Safety from creditors after a sudden demise
If the policyholder left behind any unpaid debts and loans, creditors can’t claim for settlement on the term plans that are secured under MWP Act 1874.
Safety from disputes
If the policyholder is residing in a joint family, a plan with MWP Act in insurance will secure policyholder’s wife and children in case of any dispute in the family.
Safety from some misunderstandings
Plan under MWP Act can’t be made a part of the policyholder’s will as the insurance under MWP Act acts as a separate entity.
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The following individuals should consider buying a term insurance under MWP Act full form Married Women's Property Act.
| Who Should Buy? | Why you should Buy term insurance under the MWPA? |
| Individuals with Loans or Liabilities | If you have home loans, business loans, or personal liabilities, securing a term plan under the MWP Act in term insurance ensures that your family receives the insurance money, free from creditor claims. |
| People Seeking Protection for Their Family | If you want to ensure that your family is protected from any creditors, legal disputes, or relatives with bad intentions, the MWP Act in insurance offers a robust legal safeguard. |
| Newly Married Individuals | If you're newly married and want to ensure your spouse's financial future, a term plan under the MWP Act is an excellent option. It guarantees that your spouse will receive the insurance payout without any interference from extended family members or creditors. |
| People Planning to Start a Family | If you are planning to have children, securing their future becomes a priority. A term insurance under MWP Act ensures that your children, whether natural or adopted, will be financially protected in case something happens to you. |
| High-Net-Worth Individuals (HNWIs) | High-net-worth individuals often have complex financial portfolios and large estates. An MWP term insurance helps shield their beneficiaries from potential claims or disputes over their estate. It ensures that their spouse and children receive financial protection outside of the inheritance process. |
| Non-Resident Indians (NRIs) | NRIs who may have complex cross-border assets or family living in India can use a Married Women's Property Act term insurance to provide financial security for their spouse and children in India, without worrying about foreign laws or creditors claiming the insurance money. |
| Individuals in Joint Family Setups | For those in joint families where property disputes are common, Married Women's Property Act term insurance helps ensure that your wife and children receive the insurance proceeds, free from complications. |
Note: It is suggested to calculate the term plan premium on the term insurance calculator online tool by Policybazaar before buying.
The Married Women's Property Act, 1874 (MWP Act) can help your wife and/or children in receiving the sum assured that you had planned on saving for their security after your death. This way, your wife/children can claim absolute ownership to the sum assured, without having to fear threats from creditors/relatives etc. To avail this feature, you can buy the policy under the MWP Act right during the initiation of the purchase.
Example 1: Mr. Ravi, who is a salaried person, took a house loan a few years back. He purchased a term plan online and authorized it under the MWP Act with his partner and the child (beneficiaries). After the death of Mr. Ravi, the bank will approach the court to clear all the home loans with the plan profits. The case got lined out against them and profits were given to his child and his wife as both were secured under the MWP Act.
Example 2: Mr. Kamal is a business owner who purchased some of the capital to increase his business. Kamal purchased a term plan online in MWP Act 1874 with his partner as the beneficiary. After the sudden demise of Mr. Kamal, his creditors contacted the court and pursued their right to pay all his term insurance proceeds. Since the plan was covered in MWP Act, the creditors lost the case and the benefit of SA was provided to his wife.
In the above mentioned cases, the MWP Act 1874 played a very important role in securing the loved one’s future. Nowadays, ‘building money on loan’ and ‘buying on credit’ has become very common. Business people and employed persons rely on personal loans, home loans, consumer loans, and business loans to fulfill their objectives. In such cases, how will you ensure that only your dependents collect the claim profits of the plan in case of unfortunate death? This is the time when MWP Act 1874 comes into play and it helps protect the future of your family financially.
The beneficiaries can only be:
Only wife
Only children, whether they are natural or adopted
wife /child/natural or adopted children
Beneficiaries decided and nominated once cannot be changed throughout the term of the policy.
In case of getting divorced, wife continues to remain a beneficiary that can’t be changed.
In case of an early death of the beneficiary wife, the policyholder’s legal heir is liable to claim insurance money. Thus, it is essential to declare more than 1 beneficiary at the time of purchasing term insurance plan.
Here are some key points to remember about the MWP full form Married Women’s Property Act, 1874:
Exclusive Protection for Family: The policy benefits under the MWP Act can only be claimed by your wife and/or children. Creditors, relatives, or other parties cannot access the funds.
Cannot Be Changed or Revoked: Once beneficiaries (wife and/or children) are nominated under the MWP Act, they cannot be changed throughout the policy term, even in the event of a divorce.
Shield from Creditors: If you have outstanding debts, creditors cannot claim the insurance proceeds secured under the MWP Act. This protects your family from financial distress after your death.
Long-Term Security for Children: Whether natural or adopted, children named as beneficiaries under the MWP Act will have lifelong financial protection through the policy.
Simple and Smart Estate Planning: It’s an excellent tool for estate planning, especially for individuals who want a straightforward way to ensure their family’s financial security without the complications of inheritance disputes.
As per the above discussion, purchasing a term insurance under MWP full form Married Women’s Property Act 1874 helps in securing the financial interests of your family in your absence. Once the plan is availed under the MWP Act, it might not be attached by the courts for the debt repayments. Your children and wife are eligible for the sum assured amount in case of your demise.
Note: Check out the best term insurance plan in India and choose one that suits your requirements.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
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