MWP Act, one of the most simple & inexpensive products

From being one of the oldest Acts in India to being one of the most under-rated ideas in the market, a majority of the population is unaware of the Married Women’s Protection Act 1874 (MWP Act). In simple words, the MWP Act is a provision that protects the insurance money from the creditors, banks & government agencies. No wonder, it is also on a lighter note called Insurance ka Insurance.  

We all want to be responsible, we all want to make sure that we deliver what is entrusted upon us. More so with the men as they’re seen as the breadwinners of the Indian households. They try hard to make ends meet, succeed in their pursuits, and try to make sure they give a life to their family that’s at least comfortable, if not luxurious, safe if not adventurous & full of mandatory provisions if now abundance. 

In the pursuit of making life worthwhile, running business, making investments, taking loans, creating profits, generating revenues, maintaining cash-flows, achieving break-evens, managing EMIs, etc. there are too many dimensions to making ends meet and more often than not, families end-up having creditors and a bunch of individuals or organizations that they owe a sum to. The world has normalized credit, private & government agencies encourage credit but it’s flip-side is seldom seen by the credit bearers. Any inability to repay transfers the liability on the family, estate, assets etc, thereby not only damaging the dignity of the family but also the financial standing. 

As an Illustration, 

Manoj who makes INR 15 Lakhs annually from his business, has INR 4.8 Crores of loan that his business owes to the banks and the market. In an unforeseen situation, if Manoj is unable to survive due to a mishap or a medical condition, the family will not only have a tough time dealing with their personal loss, but also will face problems from the creditors, who’d try to recover their money. 

Manoj had his life insured and his family is entitled to receive 5 Crores as insurance payout, from the insurance company against the demise of the insured. Only if things were as simple as they look, the creditors make their way to seize the asset to recover their loan & the family ends up losing the insurance money to the creditors!!!

Life Insurance is a way to ensure that you maintain your financial support to the family in case of unforeseen events. Insurance products make sure that in such situations, the wife & children are not deprived of any financial arrangements that the insured would have made for the family in the course of normal events.  

What is MWP Act

Section 6 of the Married Women’s Protection Act 1874 states & highlight “a policy of insurance effected by any married man on his own life and expressed on the face of it to be for the benefit of his wife, or of his wife and children, or any of them, shall ensure and be deemed to be a trust for the benefit of his wife, or of his wife and children, or any of them according to the interests so expressed, and shall not, so long as any object of the trust remains, be subject to the control of the husband, or to his creditors, or form part of his estate.“

Explanation: If the term insurance or life insurance policy is under the The MWP Act of 1874, it will ensure that the beneficiary of the policy, i.e. the wife, or the children or both, will always remain entitled to receive the insurance proceeds, neither the creditors, government agencies, nor the husband/insured himself can have a claim or control over the policy proceeds. 

Key Highlights of the Insurance Policies under the MWP Act

• • Once a beneficiary is declared, it can not be changed by the proposer
  • Policies under the MWP act can not be surrendered or given against availing a loan 
  • The proceeds of insurance are strictly reserved for the beneficiaries, safe from creditors and banks. 

Who can opt for Insurance under the MWP Act

Any male married Indian resident can avail the policy under the MWP Act. The benefit of MWP Act can be availed only during the purchase of a new/fresh policy. If you are a widower or a divorcee, you can still avail an insurance policy under the MWP Act wherein you can declare your children as the beneficiary of the policy. 

Who can be added as beneficiary under the MWP Act

As beneficiaries of the insurance policy, you can add your wife alone, or your child/children alone or your wife & children together. You can also decide the percentage each beneficiary will be entitled at the time of the proceed payout, but once declared, it can not be changed. Even if the policy is surrendered, the due payouts will be received by the beneficiaries as declared in the policy. In case of separation, the beneficiaries will remain the same. Parents can not be added as beneficiaries in the Insurance policy under the MWP Act.

How to opt for Insurance policy under the MWP Act 1874?

It’s a very simple process of getting your new Insurance policy under the MWP Act. At the time of taking the policy, you just need to fill-up & sign an MWPA addendum along with the application form. Some insurers have this option even in the application form & policy holders just need to select the option ‘yes’  in the form to take the policy under the MWP Act. Once the policy is taken under the MWP Act, the declared beneficiary can not be changed. 

Conclusion 

In this world of credit & loans, it is a common thing to see families with lakhs and crores of debts in the pursuit of building assets, be it employed individuals or businessmen. How does one make sure that the dependents, i.e. your family receive your insurance proceeds in case of an uneventful death of the insured? This is where the MWP act of 1874 comes into the play to ensure that the dependent’s (family’s) future is secured financially. 

Make sure that if you are a married man, you take your next insurance policy, be it term or life, under the MWP Act 1874. You may get in touch with your Insurance Manager or advisor for more information on this. 

Bonus Point: As obscure as this product is, it is also very inexpensive to buy.