Insurance
Personal Finance Exclusive
Use the Married Woman Property Act to safeguard your life insurance policy

The Married Woman Property (MWP) Act can protect the life insurance death claim benefit from creditors and ensure that your wife and children are secured. Lack of awareness and loss of control prevents insured from going for this option. Find out how you can benefit from it

Harish was running business on borrowed capital. After his sudden demise, his creditors did their best to go after Harish’s assets. Luckily for his wife, Harish had purchased a term life insurance policy choosing the option of Section 6 of the MWP Act. It ensured that Harish’s wife got the death benefit. But many are not so lucky due to lack of awareness of such a feature available with your life insurance policy.
 

Today, buying on credit has become commonplace. As a responsible citizen you should make payments during your lifetime on any loan—credit card, outstanding debt payment, etc. But, it also makes sense to ensure that your wife and children really get the death benefit from your life insurance policy.
 

Section 6 of the MWP Act allows an individual to buy a policy for himself under the Act and create a trust for the same. There is no need for creating a trust under the Trust Act. The beneficiaries (wife and/or children) can also be trustees. The policyholder has the option to change the trustees at any point in time. Even a married woman can buy MWP policy on her name with her children as beneficiaries; though the husband will not get anything from the policy. It will be considered as a separate asset as if she is unmarried.
 

The procedure is simple, but it has to be done at the time of buying the policy. At the time of making the application, a separate form has to be filled by the proposer for it to be covered under MWP Act. The form seeks details of the beneficiaries, the share of the benefits that are to be accrued to them and the trustees.

According to Sanjay Tiwari, vice president of strategy and product, HDFC Life, “There is lack of awareness and very low percent of MWP policy sales; we do train our agents for highlighting about MWP benefit to customers. It clicks with specific customers who have their own businesses and want to ensure that wife and children really benefit from the policy.”
 

Before you jump in to go for Section 6 of MWP, do it only for genuine reasons. If the life insurance policy has been purchased with an intention to defraud creditors, the protection under MWP may not work. Creditors can assert their right to get paid out of the proceeds of the life insurance policy.
 

According to a veteran life insurance agent, “MWP policy sales have reduced over the years after estate tax and gift tax were abolished in India. Very few customers go for it today.”
 

Why go for it? 

  • A MWP insurance policy is free from creditors and court attachments. The welfare of wife and children are protected with utmost care
  • A policy under MWP Act is a good feature for families that have debt
  • MWP act is applicable for all married women of all religions
  • There is no need for creating a Trust under the Trust Act. The policyholder has the option to change the trustees at any point in time
     

Why not go for it?

The policyholder of a MWP policy loses all control over the policy with the exception of paying premiums. The policy becomes a trust property (wife and/or children)

There can be no changes to the policy without the consent of the beneficiaries

The beneficiaries of the plan, once declared, cannot be changed at any time

The proposer cannot take any loan or assign the policy to another person

The policy maturity, surrender value will go to the trust (and hence the beneficiaries only).

User

COMMENTS

Sandeep Sapre

2 years ago

What if a person absolutely assigns the policy in favour of his wife instead of going under MWP way? What is the legal difference?

MAHESH KUMAR

2 years ago

what will happen to the sum assured on maturity if the person has divorced the wife (who is the beneficiary).

Harish

3 years ago

Dear All,

I know this is quite an old article; people may have not seen it for sometime. Yet, I am hoping I'll get an answer.

My question is - can an existing policy be registered under MWPA?

If no, why?
If yes, why?

Also, if yes, then, can this wonderful provision also not be misused to defraud creditors?

Hope someone will be able clarify these doubts.

regards,

REPLY

raj

In Reply to Harish 3 years ago

Dear Mr Harish,

The answers are in the article -

1. The procedure is simple, but it has to be done at the time of buying the policy.

2. Before you jump in to go for Section 6 of MWP, do it only for genuine reasons. If the life insurance policy has been purchased with an intention to defraud creditors, the protection under MWP may not work. Creditors can assert their right to get paid out of the proceeds of the life insurance policy.

The idea is that the welfare of wife and children are protected with utmost care.

The reason why is it not popular -The policyholder of a MWP policy loses all control over the policy with the exception of paying premiums. The policy becomes a trust property (wife and/or children)

Krishnan

4 years ago

lucid and useful

uttam

4 years ago

Thnks a tonne Raj, but can u pls explain the following with simple ez:

• A MWP insurance policy is free from creditors and court attachments. The welfare of wife and children are protected with utmost care

thnks once again.

rgds,
uttam

Milaap Microfinance

4 years ago

Thanks to the Author Raj Pradhan for the great information. Hope this will help to aware a number of people to take advantage of the MWP Act as many don't even have a clue of such a law exists.

Mehboob Charania

4 years ago

please note that MWP can be added anytime even after the policy taken

REPLY

deepakgajra

In Reply to Mehboob Charania 3 years ago

i think can not added anytime after the policy taken add only when submit proposal

DEEPAK KHEMANI

4 years ago

This good provision has been in existence for many years now but very people take advantage of it, Thanks Raj for making your readers aware of it.
However I would like to add that now many husbands are now hesitant to take this policy on their wives(MWP) name taking into account the high divorce rates in mew marriages!

REPLY

raj

In Reply to DEEPAK KHEMANI 4 years ago

very true

Krishnan

4 years ago

Thanks for the informative article. I would mention an interesting case in regard to MWP. A wife covered under the MWP , wanted to raise a loan against the policy to pay for the treatment of her husband who was seriously ill. The request was refused, as no loan can be granted against such policies.
A very considerate bank officer chose to grant a loan against the policy, on the commonsense ground that it is important for the wife to have her husband nursed back to good health. Of course , there was audit objection and the officer was cautioned.

REPLY

raj

In Reply to Krishnan 4 years ago

thanks for your feedback

Now, Yashwant Sinha demands Gadkari's resignation

Sinha's demand once againg brought alive the campaign initiated by the Jethmalanis for the resignation of BJP President Gadkari

 
New Delhi: The campaign for the resignation of Nitin Gadkari, the beleagured president of Bharatiya Janata Party (BJP) on Tuesday got fresh ammunition with senior leader Yashwant Sinha demanding that Gadkari step down immediately, reports PTI.
 
"Whether our party president is guilty or not is not the issue today. The issue is that all of us in public life should be beyond reproach," he told PTI.
 
Sinha's demand brings alive once again the campaign initiated by BJP Rajya Sabha MP Ram Jethmalani and his son Mahesh for the party chief's resignation in the wake of reports of alleged dubious financing of Purti Sugar and Power Group.
 

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