Term insurance is an essential tool for protecting your family's financial future. It's designed to provide a lump-sum payment to your beneficiaries if you pass away during the policy term. Before 1874, married women in India could not own property or have inheritance rights. However, the Married Women's Property Act of 1882 has significantly impacted how term insurance policies are structured and how they can be used. This article will explore the Married Women's Property Act, how it affects term insurance policies, and why it's important to understand this law.
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In 1874, the British Raj enacted the Indian Married Women's Property Act to safeguard married women's interests. It offered women access to their own property and any inherited property. The Married Women's Property Act was amended in 1923 to include Term Life Insurance. Moreover, the married woman could also choose what she wanted to do with the property. Whether she wanted to hold on to the property and assets, sell it, or bequeath it to others, the choice was hers alone.
One of the biggest disruptors in British India that still finds a place today, the Indian Married Women's Property Act forced citizens to unlearn and relearn their attitudes and policies towards women. The Act heralded a new era in women's independence and helped them receive, or stake a claim, in their rightful belongings, assets, money, and property.
Buying a Life Insurance Policy is straightforward, but the process of ensuring the death benefits or savings go to their beneficiaries may not be so straightforward. The money they've worked so hard to save should end up with their loved ones instead of being claimed by creditors, repo agents, or loan sharks. The policyholder's money or property can be claimed after death if they have left an outstanding loan or owe money to others.
The original Married Women's Property of 1874 was updated in 1923 to extend to Term Life Insurance policies that went to a married woman and/or her children.
The 1923 Married Women's Property Act safeguards the woman's property and assets, including Term Life Insurance, from relatives and her husband. According to the Married Women's Property Act, when a married man buys a Term Life Insurance plan under the Act, only the wife and children named in the policy will receive the amount, and no one else. Even the policyholder cannot claim any amount!
A term life insurance under the MWP Act functions as a trust. The benefit amount and the servicing of the policy are controlled solely by the trustees. Creditors are also exempt from any claim. It means the policyholder, i.e., the husband, cannot make claims against it. The trust will hold and protect the claim proceeds for the designated beneficiaries (usually the wife and/or children), ensuring their financial protection.
A term plan under the MWP Act is also an excellent choice in joint family arrangements where disputes regarding money and property can arise. This specialised plan eliminates any discrepancy by providing a clear title to the policy beneficiary. The beneficiaries of such a term plan remain unchanged during the entire policy term.
You can choose to nominate your wife if you don't have children solely or if they are grown and financially secure. In the event of your untimely death, she will get the full death benefit from your term insurance plan. In this manner, she will be able to support herself independently of loans or any other source of income.
If you want only your children or child to benefit from the policy, you can choose them as the beneficiaries, and they will receive the benefits. They will have to divide the proceeds among more than one child. The policy benefits will help manage their daily costs, career-based needs, and educational goals can be met.
You may also choose to share the benefits of the coverage between your wife and children. Furthermore, the entire coverage may be split into percentages based on their future requirements. If the children are small, you can give your wife a bigger portion so she can take care of both the household bills and their schooling.
Buying a Term Life Insurance Policy under the Married Women's Property Act ensures that the policyholder's wife and children are the sole beneficiaries of the death benefit. Here are other benefits.
When the policyholder purchases a term life insurance policy under the Married Women's Property Act, he buys it only for his wife and children. The beneficiaries should be identified and stated in the insurance policy when the policyholder first purchases it.
Purchasing a Life Insurance Policy with the Married Women's Property Act is applicable to all religions.
The person who buys the policy can split the amount according to his wife and children's requirements. However, these amounts must be specifically mentioned in the policy and cannot be amended.
The policyholder doesn't have to create a separate trust for the beneficiaries. This trust belongs solely to the wife and children of the policyholder.
When a woman or a man buys a Term Life Insurance Policy under the Married Women's Property Act, family members or creditors cannot claim the death benefit because it is protected under the act and reserved for wives and children only.
The last thing on a divorced person's mind would be considering their Term Life Insurance!
However, identifying and securing their insurance, payout, if any, and clearing any dues or settlements should be a priority when they're no longer married to the person they took out a term life insurance policy with.
As stated above, once the Married Women's Property Act has been invoked in a Term Life Insurance Policy, it cannot be amended or changed, securing the woman's finances under any circumstance.
uying term insurance under the MWP Act is quite simple and synonymous with buying a standard life insurance policy. The significant steps of this plan are:
First, you must buy a term insurance plan from your chosen provider.
Next, you have to fill out the insurance form accurately.
Find the section that asks if you are buying the term plan under the MWP Act and select ‘Yes.’
Provide nominee details, including name, relationship, and the coverage amount.
The few fundamental factors that affect a term plan under the MWP Act are:
The premium amount depends on the total number of beneficiaries and how the coverage is split between them if there is more than one beneficiary.
The policyholder's medical condition and lifestyle are also determining factors. Usually, individuals engaged in risky activities may receive lower coverage or need to pay higher premiums.
As in any standard term plan, the policyholder's age also plays a part in determining the insurance premium.
These factors are commonly considered in underwriting to assess the risk associated with insuring an individual and determining the appropriate premium to charge.
There are several other laws enacted by the Married Women's Property Act (MWP Act):
With the amended MWP Act of 1923, a married woman can buy and possess an independent term life insurance policy and claim its benefits. Before the act, married women were barred from holding such independent contracts.
Previously, when a married man with outstanding loans and debts died without clearing the same, the creditors could claim the property and assets, including the term plan benefits. However, based on section 6 of the MWP Act, the death benefits of the term plan can only be received by his wife and/or children.
Other laws include Ownership over Earnings, Husband’s Liability for Breach of Trust, Initiate Legal Proceedings, Liability for Post-Nuptial Debts and Husband’s Liability for Ante-Nuptial Debts.
In conclusion, the Married Women's Property Act (MWPA) allows married women to have separate property rights and protects their assets from being claimed by their husbands or creditors. A Term Life Insurance Policy under the Married Women's Property Act also offers the wife coverage rights in the event of a divorce. A policy converted to the Married Women's Property Act cannot be modified or changed afterwards, protecting the woman's assets in all situations. This ensures optimal peace of mind, knowing that the sum insured will be received by the one it is insured for.
Here are some common questions about the Impact of The Married Women's Property Act on Term Insurance
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