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Barely Known – Life Insurance Policy Under MWP Act

Mahesh has recently started a business in partnership with his friend. He has used a substantial share of his savings and has also taken huge loans to the venture. Mahesh is 40 years old and has two school going children and a homemaker wife. Understands that should he be able to pay his creditors, his assets (house, car, fixed deposits, mutual fund investments, life insurance proceeds, etc.) will be attached to his creditors to recover their dues.

Mahesh wants to ensure that his wife and children 's future is not impacted in case of such and unfortunate eventuality. He plans for this contingency by taking a life insurance policy on his life during the MWP act. But is it a life insurance policy that part of his assets and why would his creditors save the policy?

What is MWP act?

What is MWP act?

The The Married Women's Property Act (MWP Act) was enacted in 1

874. It was created to protect the properties owned by women from relatives, creditors and even from their own husbands. Section 6 of the MWP Act covers life insurance plans. Any married man (including widowers and divorcees) can take a policy during the MWP act. Each policy under the MWP Act is considered as a special trust.

What the law says:

Section 6 of the Married Women's Property Act (MWPA), 1874, provides that a policy of insurance effect by any married man on his own life and expressed on the face of his wife, or 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, as long as an object of the trust remains, be subject to the control of the husband, or to his creditors, or form part of his estate.

How does MWP Act protect your wife and children?

The proceeds of a life insurance policy under the MWP Act cannot be claimed by creditors, relatives (even parents and siblings) or form part of the will (estate of the proposer). This is a foolproof way to ensure that the financial future of your wife and children is protected.

Isn't nomination sufficient?

You may be thinking, making your wife and / or children as the nominee (s) ) in your policy will be sufficient to ensure that the proceeds are paid to them and why you should not buy a policy under the MWP Act. However, merely nominating may not serve the purpose.

In case of a claim, the insurance company will hand over the proceeds to the nominee. Here, please note that nominees have been viewed as more of life insurance proceeds and not ultimate beneficiaries. * The creditors can lay a claim on the proceeds. In this aspect, a policy under MWP act scores over nomination as the MWP policy is treated as a trust and the insurance proceeds are free from creditors, court and tax attachments. ^ Only the named beneficiaries have a right over the proceeds.

How to buy Life Insurance under the MWP act?

The husband needs to apply for a policy on his own life. Along with the application for life insurance, he is required to submit the MWP addendum / form (provided by the life insurance company). The addendum is available on the life insurance company's website

The following details need to be provided in the addendum:

thus, the policy will be issued under the MWP act provided that the addendum is complete in all respects as desired by the company. 'MWP act policy' is mentioned on the face of the policy contract by most companies.

  • Are there any charges to buy a policy during the MWP act? no additional charges to be paid for getting a policy issued under the MWP act.

    • What benefits accrue to the beneficiaries?

    Surrender and Death proceeds.

    • Can the beneficiaries be changed? This is an important feature which protects the interests of the beneficiaries as even if there is a separation or divorce at a later stage the husband will not be able to change the beneficiaries.

      • What is the husband's role in the policy? ] The husband is the life insured and the policyholder. He is responsible for making the premium premiums but benefits not payable to him.

        • Can the policy be assigned?

        No, assignment of policy (transfer of ownership) or policy loans are not allowed by most companies for MWP policies to safeguard the interests of the beneficiaries.

        • Can you have a policy for converting to a MWP Act after policy issuance?

        • Can you have more than one MWP policy?

        Yes , you can buy multiple life insurance policies under the MWP act.

        • Which type of life insurance – term, endowment, money back, ULIP can be purchased under the MWP Act

          • Who should opt for policies under the MWP act?

          It is useful to safeguard the interests of the wife and children of self-employed persons, entrepreneurs or salaries people with loans or liabilities.

          Also, people living in joint families make use of this commission to ensure that the proceeds are paid to the wife and children and other relatives (parents, siblings) do not claim it.

          The life insured can rest assured that in case of his untimely death, the life insurance proceeds will be paid to his wife and children only and creditors and other parties cannot claim it.


          Ajay Sharma, a businessman had taken loans to finance his business. He was also a insurance policy under the MWP Act 1874. His wife was named as the beneficiary. After Ajay's sudden demise in an accident, his creditors approached the court seeking to use the death benefit proceeding of the term plan to settle their dues. As the policy was issued under the MWP Act, the creditors lost the case and the court ordered that the death benefit is paid to his wife.

          The policy cannot be assigned. It cannot be used as collateral for loans. Also, all policy benefits will be payable to the beneficiaries and not to the policyholder.

          Though taking a policy under the provisions of the MWP act is simple and inexpensive, it is not widely used because of lack of awareness about this among the sales force. With more youth preferring to be self-employed and the government of India promoting entrepreneurship, it is the right time for life insurance companies in India to highlight the benefits of the MWP act while soliciting new business.