Your lenders could snatch away the money from your life insurance policy when you are no more. Want to avoid this? Get your policy under MWPA. A number of people don’t know that when individuals pass away, creditors can claim their assets if loans are not repaid. Assets include money from life insurance policies. Even the income tax department can claim the policy if taxes are not paid. The solution for this is to get the policy under the Married Women's Property Act (MWPA), 1874.
What is MWPA?
MWPA was created to secure the assets owned by a woman (after the demise of her husband) from claims made by the husband’s creditors and relatives. Section 6 of the MWPA covers any life insurance policy taken in favour of the policyholder’s wife and children. The sum assured of such a policy will always be the property of the wife and children. No creditor or relative can lay any claim on the proceeds as long the beneficiaries named in the policy are alive.
How does it work?
An insurance policy under the MWPA is considered as a trust with the beneficiaries as trustees. Only trustees will receive the benefit amount.
Who can opt for MWPA?
If you are a married man residing in India, you can take a policy under the MWPA. You can avail the benefit if you are a widower or a divorcee and name your children as beneficiaries.
Who can be beneficiaries?
You can name your wife, your child or children, or your wife and children together as beneficiaries. You can divide the policy’s sum assured in equal amounts or assign specific percentages of it to each of the beneficiaries. Note that once the policy is issued, you cannot change the beneficiaries.
How to take a policy under the MWPA?
Simply fill in your details in the MWP addendum form while applying for insurance. Some companies have it as a question on their application form. Just tick the box next to ‘I would like to buy the policy under MWP’ and fill in the beneficiary info such as the beneficiary’s date of birth and share in the sum assured. Note that you can get the MWP benefit only while taking the policy. Any addition or changes are not allowed later. Also, it will be available only if you take the policy in your name. Looks like a neat benefit? However, there are some points that you need to note before taking the policy. Not everyone will tell you about these.
Tips on MWPA
Got questions? Leave a reply and we will get back to you. Also read: 4 Ways to Beat Falling Insurance Cover for Deposits
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