The Importance of Married Women's Property (MWP) Act in your insurance Policy
Buy a life insurance cover and secure the future of your family". You might have listened to this axiom countless times from insurance sales persons, financial advisors, talking heads on TV, among others. Sure, it is a great sales pitch that always works. It gets your attention to this essential cover which will protect your family in case of your sudden demise, an unpleasant thought you wouldn't entertain otherwise.
However, what these experts don't tell you is that buying a life insurance cover alone won't necessarily assure the well-being of your dependents. For example, if you are a proprietor and have accumulated debts, your creditors will have the first claim on your policy proceeds. Or your insurance policy (with savings element like endowment plan, unit linked plan and so on) will be attached if you file for insolvency. There is a way out, though.
The better option to avoid this is to bring your r policy under the purview of the Married Women's Property (MWP) Act. This ensures that on the death of the life assured, the dependents receive the proceeds, not the creditors
It is always advisable for the businessmen to go for this option. Even salaried individuals can exercise this option "It's extremely beneficial for proprietors from the small and medium enterprises (SME) sector since their personal property will get attached if there is a winding up order or some court proceedings
However, despite being a fairly simple and inexpensive procedure, not many policyholders opt for it, primarily because of lack of awareness. Remember, every policyholder can adopt this route to protect his family and does not have to shell out a single penny for the purpose.
"Any married man can take a life insurance policy under the MWP Act. This includes divorced persons and widowers, who can use the provision for their children. The policy can be taken only on one's own name, i.e., the life assured has to be the proposer himself. Any type of plan can be endorsed to be covered under the MWP Act
All you have to do to get the policy covered under the MWP Act is simply inform your life insurance company about your intention, and fill up a simple application form. Some companies include this option in the main proposal form itself and the policyholder is required to merely tick the right box to indicate his acceptance. "It is not significantly different from buying a regular policy. In addition to the regular proposal form, which contains the policyholders' details, the policyholder has to fill a separate form which will include the details of the beneficiaries and the share of benefits for each of them.
Along with the form, the policyholder has to submit a letter stating that the policy has to be issued under MWPA. Then the original policy bond/document will capture the fact that it has been issued under MWPA
If you have a joint family, MWPA could be a great solution for your solid financial setup. "In a joint family, there can be several ambiguities and obligations. The structures may not be clear, which increases the scope of family disputes on money and property. An MWP policy will give a clear title to the beneficiary and an exercising right for the policyholder as well.
However, you need to exercise caution if you plan to cover your insurance policies with savings element under the Act. Unlike term policies, Ulips and endowment plans are expected to generate returns on your investment at maturity. "If you choose to get policies with savings component issued under the MWP Act, you cannot hope to individually benefit from the 'investment' made, as you would be surrendering all your rights on the policy in favour of your wife and children
Only your wife and children will be entitled to the sum assured in the event of your demise. Similarly, the maturity proceeds too will go to your wife and children if you outlive the policy term.
Once a policy is purchased under the MWP Act, the same ceases to be part of your estate and cannot be attached by courts for repayment of your personal debts. You need to take into account these factors before getting the policy issued under the MWP Act.
Note: For more details and clarification of doubts, please contact your Insurance Agent/Co or your Financial Advisor
Best Regards
Prakash Nair
No comments:
Post a Comment