Since the pandemic, the relevance of the MWPA act has been significantly increased in the insurance industry.
By purchasing a Life Insurance policy through the MWPA act, you are creating an asset for your family, and all the rights of that policy are confined only to your family. No one can supersede those rights.
The MWPA act protects your wife and children, wife alone, or children alone.
How does MWPA help us?
The purpose of buying life insurance is to protect your family, but that might not happen if you just buy a normal life insurance policy and leave behind a lot of debt for your family to deal with.
After a policyholder’s death, his creditors, government liabilities, or other debts are recovered by his/her policies. Creditors write a legal letter to his/her insurance provider, requesting the policy proceeds to recover their money.
And if you purchase a life insurance policy through the MWPA act, after your death, the policy proceeds will only go to your family and not your creditors.
In 1992. Harshad Mehta a well known Indian stockbroker, when no one was aware of this concept, Mr. Mehta bought an MWPA insurance of approximately 10 cores that went only to his family despite the government liabilities he had.
Buying a life insurance policy under the MWPA act is a really good opportunity for the ones working with the government. You can protect your family from liabilities like- GST, income tax, currency, ED issues, etc.
PS- The day you purchase this policy, no one except your family has the right over it, not even you. The policyholder cannot use this to purchase loans or to use it during maturity after withdrawing it.
Sections of MWPA
Section 5 (for women) - If a lady purchases insurance for herself and creates an asset for her and her kids, the rights of the policy will only be confined to her and her children, not her husband either.
Section 6 (For men) - If a man purchases insurance for himself and creates an asset for his wife and kids, the rights of the policy will only be confined to his wife and children, not any other family member or third-party.
How to Apply for a life Insurance Policy through the MWPA Act
You can apply for a life insurance policy through the MWPA act only at the initial stage. This process is quite simple, just fill an addendum along with your insurance policy application at the time of taking the policy.
Pro Tip-Term policy should always be taken through the MWPA act
Can the Policyholder change the trustee or beneficiaries?
You (the policyholder) have the option to change the trustees at any point in time. However, the beneficiaries of the plan once mentioned in the document cannot be changed. In case of a death claim, the insurance policy proceeds are given to the trust and cannot be claimed by the creditors.
We at Insurance Samadhan, are here help you through life/health/general insurance-related issues, whether you are struggling with a lapsed policy, claim rejection, misselling or service-related issues, our experts are here to help you through it all!
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