Ch. 16: Married Women’s Property Act

You buy a term insurance plan so that your family remains financially protected in your absence. You don’t want them to be left with insufficient funds to maintain their lifestyle or compromise on their dreams. So, you make sure you buy the term plan with adequate coverage, choose customisations that fit your family’s needs, pay premiums on time, and so on.

But even after all this due diligence, there could be some hurdles stopping them from receiving the term insurance claim. If you are a part of a joint family, for example, other members might claim to be legal heirs. Or if you have loans/liabilities, the term insurance claim will be used to settle those first - before it reaches your wife or kids.

If you are married and male, the Married Women’s Property (MWP) Act can help prevent this situation. How?

Let’s find out!

The Married Women’s Property Act is a welfare act that confers specific rights to married women.

You can opt to buy your policy under the Married Women’s Property act by signing an extra addendum along with your proposal form. When you buy a policy under this Act, the sum assured under the policy can only be claimed by your wife and children as signed off in the addendum. No person, institution, or heir in your family can claim the proceeds received to settle any loans.

Example:

Avyukt, 25, has taken a term insurance policy worth Rs. 1 Crore. He has not signed the MWP addendum while buying the policy. He has a home loan of Rs. 25 Lakhs. Now, let’s say Avyukt passes away one year after he buys the term plan. Let’s see how the claim will be paid -

• The bank that issued the home loan can stake a claim on the term insurance claim to repay the loan of Rs. 25 Lakhs.
• The insurer will then pay the remaining claim amount of Rs. 75 Lakhs to his wife. She can then use this amount however she wants.

But what if Avyukt had signed the MWP addendum? How would the claim be paid in that case?
Let’s see -

• Avyukt’s wife will have the absolute right to the entire claim amount of Rs. 1 Crore received from the insurer.
• His wife can choose whether to use the claim amount to pay off the loan first or use it for another purpose.

Here are a few important things about the MWP addendum that you should be aware of -

• The MWP addendum can only be signed at the time of buying the term insurance policy.
• Once you sign the MWP addendum, it cannot be changed or removed by anyone, including you.
• Last but not least, the MWP addendum stands valid even in the case of a divorce.

So, that is all about the Married Women’s Property Act. If you’re married and male, and you want to confer absolute rights to your wife, make sure you sign the MWP addendum while buying term insurance. MWP Act is a sure-shot way through which you can ensure that the term insurance claim reaches your wife or kids - before it reaches anyone else.