According to Section 6 of the Married Women’s Property Act (MWPA) of 1874, the benefits of an insurance policy of a married man is directed towards his wife, or his wife and his children alone. In any case, the benefits are not to be transferred to the control of the husband or to his creditors which protects the rights of the policy holder’s wife over the benefits of the insurance.
The clearly goes on to state that any insurance policy taken by a married man on his own life and categorised under the MWPA in favour of his wife and children will always be their property. The policy holder or any of his creditors will not have any right or control over the property or the benefits of the insurance policy whatsoever.
Insurance endorsed under MWPA will also exclude the husband’s parents from claiming the benefits of the insurance which strips them of the right to claim. As a matter of fact, the husband (policy holder) himself will not have any right over his own survival benefits of the insurance policy, if there are any. According to the MWPA Act, as long as any one of the beneficiaries declared in the policy is alive, no one else has the right to claim the benefit of the same.
This way, the Married Women’s Property Act provides a method in which a policy holder who is a married man ensures that his immediate family named in the policy is protected without having to create a separate deed or a trust. The MWPA, by default, creates a trust with the beneficiaries of the policy as trustees without a formal trust and also protects the family of the policy holder from his creditors or anybody else for that matter.
The first and last intention of getting a life insurance is to help the next of kin financially after the policy holder’s demise, so that their lives are not left unsupported. The purpose of securing the family members’ lives is not complete till the benefits reach them and not a third party. That way, the family is supported financially with the sum assured from the policy till they figure out another source of income to compensate their bread winner’s income.
In case of regular life insurances, the proceeds or benefits of the policy can be claimed by the policy holder’s creditors if the insured owes them money or even by their legal heirs. The rights of those who are yet to receive their money back from the deceased supersedes that of the beneficial nominees.
One can buy an life insurance policy under MWPA to avoid such situations where the creditors claim the benefits of the policy and the family is left with nothing. Section 6 of the MWPA provides special protection of the policy holder’s wife and children and entitles them to the proceeds of the policy. This way, the family is also benefitted and the creditors cant prey on the money that is supposed to family of the supposed.
Any man who is married and is residing in India (except Jammy and Kashmir) is entitled to avail benefits of MWPA. The term ‘Married Man’ includes a widower and also a divorcee. He has the option of naming his children as beneficiaries if he wishes.
This act only allows a man’s wife and children to be beneficiaries and consequently, no other member of the family is allowed to claim the benefits of the policy.
Insurance policies endorsed under this act will have the beneficiaries declared at the time of registering the policy. This reduces the confusion or legal hassles after the policy holder’s demise. Under this act, only the wife and children can be declared as beneficiaries.
Any married woman living in a joint family can make sure the proceeds of the policy are directed towards and not give chance to any other family member to claim the benefits after the policy holder’s demise. This will protect her future and that of her children’s.
In case of the policy taken under MWPA is a cash value policy which has maturity or survival benefits, even then the benefits of the policy will be handed over to the wife. The beneficiaries declared in the policy will receive the benefits, irrespective of the type of policy. In case of other regular life insurance which are not endorsed under MWPA, the proceeds of the policy will be handed over to the policy holder and not to the beneficiaries.
The process begins by simply filling in a Married Women’s Property Addendum at the time of buying the insurance. This can be done without formally creating a trust or a deed separately. Further, insurance under this act will not allow even the policy holder to make changes to the beneficiaries of the policy later on.