The Married Women's Property Act is an act created to protect the property rights of married women. If a married man owes money to some individual/organization who have the right to sell the man’s properties (land, house, life insurance policy, jewelry, bank deposits, mutual funds) then the wife can protect these properties under the MWPA act.
How does MWPA work in respect of a life insurance policy?
Let’s understand the MWPA act with an example:
Mr. Anjan is a business owner and he has taken loans and credit limits from his bank. The bank secures these credit limits against the assets of business, collaterals and life insurance policies. In case Mr. A dies and there are liabilities to be cleared off, his bank will liquidate all assets, properties and the life insurance policies that belongs Anjan.
The MWPA plays a critical role in such situations. If Anjan attaches MWPA with his life insurance policies then he can protect his wife and children. The bank cannot liquidate his Life insurance policy and take money if MWPA is is attached to his policy. Here, the proceeds from the life insurance policy of Anjan will only go to his nominee as mentioned in the policy.
We talk about life insurance as means of financial protection, but the whole essence of life insurance gets defeated if the money does not go to the family and gets attached for some other reasons. Simply put, if you attach MWPA in your life insurance policy, the proceeds from this policy will not go to the bank or any of your creditors. It will be secured for your wife and children. But if you do not attach MWPA in your life insurance policy then creditors can liquidate the same and use it to recover their money.
What is the process to attach MWPA to your life insurance policy?
- Fill up the MWPA form, at the time of application of a life insurance policy.
- Provide details of your wife and/or children, whoever should be the beneficiaries in the policy.