The primary purpose of investing in life insurance is that it protects the livelihood of family members that depends on the existence of the policyholder. Insurance helps solve the problem of the family members having to fend for themselves by handing over the claim amount to the nominee.
Although, this doesn’t solve the problem entirely, listing your family member as a nominee might not solve the problem if other legal heirs can still claim the proceeds.
A beneficiary nominee is different than a nominee
Till now, the nominees were the ones who could receive the claim proceeds on behalf of the legal heirs of the policyholder. The revised Insurance (amendment) Act 2015, states that a beneficiary nominee which makes them the final recipients of the insurance proceeds.
PS- This also helps policyholders to specify multiple beneficiary nominees and their proceeds.
Why is nomination not sufficient?
Once the beneficiary has been assigned, nobody can challenge their right over their claim proceeds. Although, the beneficiary nominee can be changed during the tenure of the policy.
That means if a man is going through a divorce or under the influence of others, can change his wife’s name as the beneficiary at a later stage.
What does MWPA insurance do? How does it protect you and your family?
The proceeds of a life insurance policy can still be handed over to the policy holder’s creditors or legal heirs if they are just listed as a beneficiary nominee.
Buy Life Insurance under MWPA act to avoid such a situation entirely. The MWPA Section 6 protects your wife, children, or parents and refrains any creditor or legal heir to claim your life insurance proceeds.
What does the law say?
Under this act, Section 6 highlights its importance: "a policy of insurance effected by any married man on his own life and expressed on the face of it to be for the benefit of his wife, or of his wife and children, or any of them, shall ensure and be deemed to be a trust for the benefit of his wife, or of his wife and children, or any of them according to the interests so expressed, and shall not, so long as any object of the trust remains, be subject to the control of the husband, or to his creditors, or form part of his estate."
Who all are covered under the MWPA Act?
- Wife alone
- Child/Children (Biological or adopted children)
- Wife and children together
Who should get it?
Any married man or woman can buy a life insurance policy under MWPA act, including divorced and widowers. Although, the husband will not get anything associated with the policy as this will be treated as a separate asset.
All types of policies are covered under MWPA no matter what the time, age, and the premium amount is.
Advantages of MWPA
- Applicable to women across the country irrespective of their religion
- The money kept aside by the policyholder is used for the right purpose, to protect his loved ones and not to pay off his debt.
- You can have more than one policy under the MWPA act
- Works towards the upliftment of women by providing them financial security.
- The final recipient of the claim proceeds will be decided from the beginning.
- You don’t need to create a separate trust for your children.
How to buy an insurance policy under MWPA?
This process is quite simple, just fill an addendum along with your insurance policy application at the time of taking the policy.
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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